Day: January 10, 2022

The Pakistani Rupee (PKR) managed to hold out against the US Dollar (USD) in the interbank market today. It hit an intra-day high of Rs. 176.55 against the latter during today’s open market session.

While redundant, it depreciated by 0.01 percent against the USD and closed at Rs. 176.68 today after gaining 24 paisas and closing at 176.67 in the interbank market on Friday, 7 January.

The rupee managed to hold its own against the USD after news that the Executive Board of the International Monetary Fund (IMF) has rescheduled the assessment of the Sixth Review and the delivery of a $1 billion tranche under the Extended Fund Facility (EFF) after a request from the Pakistani authorities.

An official statement by the Ministry of Finance explained that the government has introduced the amended Finance and SBP Autonomy bills in the National Assembly and that the IMF’s board will consider it for approval as soon as the procedural formalities are completed.

The bills must be cleared for the IMF Executive Board to resume Pakistan’s $6 billion loan program. The government hopes to pass the bills before the meeting of the IMF’s Board of Directors on 12 January. If passed, the bills will help to generate more revenues to the tune of Rs. 343 billion, and subsequently support the local exchange unit.

In light of the PKR’s interbank performance during the trading hours earlier today, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, tweeted, “Couple of IMF related news appearing in the press about [the] change of mission leader in Pakistan & removal of Pakistan’s agenda from the IMF Executive Board calendar needs official clarification. It may not help & possibility is that Financial market would react negatively”.

Conversely, the PKR reversed most of its gains against other major currencies in the interbank currency market today. It posted losses of 55 paisas against the Euro (EUR), Rs. 1.01 against the Pound Sterling (GBP), Rs. 1.08 against the Canadian Dollar (CAD), and 68 paisas against the Australian Dollar (AUD).

Conversely, it held out against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.

Source: Pro Pakistani

An overwhelming number of investors have shown their interest in the establishment of LNG terminals/ virtual pipelines at Karachi and Gwadar Ports, and applications for at least seven LNG licenses are in various stages of considerations.

According to official documents available with ProPakistani, as of December 2021, a total of seven applications are pending for licenses or NOCs; four applications are pending with the Oil and Gas Regulatory Authority (OGRA); while three applications are pending with Port Authorities.

According to the documents, Gwadar Gasport Limited (GGPL), after entering an agreement with GITL, applied for a grant of provisional Licence on 4 March 2021 to OGRA, which was evaluated under the provisions of Rule 33 of LNG Rules 2007.

The OGRA sought the status of consent from GPA, which is required under Rule 4(3)(b) of LNG Rules 2007. As per the project detail, Gwadar International Terminal Limited (GITL) and Gwadar Gas Port(Pvt) Limited (GGPL) signed an agreement on 17 December 2020 to develop a fast track LNG import terminal at Gwadar Port and to deliver gas without using any government-owned gas infrastructure in the country.

The project envisages that it shall have a Floating Storage Unit (LNG vessel) to be berthed permanently at Berth 3 of the Port. LNG will be discharged from FSRU into ISO road tankers. ISO tankers will provide an uninterruptable supply of LNG (in the small storage tank) placed at the customer premises where vaporizers for re-gasification of LNG will be installed. However, on approaching GPA for consent, they have conveyed through the Ministry of Maritime Affairs(MoMA) not to entertain the application of GGPL till clearance from them. The Provisional License has, therefore, not been issued so far by OGRA.

Regarding NOC/Consent by GPA, the GPA and MoMA are of the view that Gwadar Port Master Plan offers a detailed plan and dedicated location for the establishment of the Gas terminal and associated onshore and offshore installation. It was suggested that a potential LNG terminal developer may submit a proposal to GPA for the establishment of such activity in a dedicated location as per the approved Gwadar Port Master Plan Instead of the utilization of General Cargo Berth.

The Metro Gas (Private) Limited applied to Oil and Gas Regulatory Authority(OGRA) for Provisional License on 26 October 2021. The company wants to establish an LNG terminal at Karachi Port. However, it has not yet been granted a license as they don’t have consent from the relevant Port Authority.

LNG Flex Limited has applied for a provincial license dated 8 October 2021. The company is interested to establish a terminal at Karachi Port and Port Qasim. A letter from Karachi Container Terminal (KICT) and a Memorandum of Understanding with Qasim International Container Terminal (QICT) have been provided. However, the Provisional License was not yet granted as NOC from KPT or Port Qasim Authority are missing, the documents reveal.

Shahzad LNG (Private) Limited applied for OGRA for a provisional License dated 26 October 2021. However, it has not yet been granted as they don’t have consent from the relevant Port Authority.

Shahzad LNG (Private) Limited has not yet defined its port of interest.

Other applications with Port Authorities, Daewoo Gas (Private) Limited (DGPL) at Gwadar Port. DGPL has approached Gwadar Port Authority (GPA). Similarly, Daewoo Gas (Private) Limited (DGPL) has acquired Global Energy Infrastructure Pakistan (GEIP), which was planning to establish an offshore Floating Storages Regasification Unit(FSRU) based LNG import terminal.

DGPL has approached Port Qasim Authority (PQA) with a proposal to establish a virtual LNG terminal at the same site.PQA doesn’t consider the GEIP Implementation Agreement valid any longer. DGPL claims that most requisite studies have already been conducted for LNG handling at this site, therefore, a terminal at this site can be established in a shorter time.

Another applicant is First Dawood Investment Bank which has approached Karachi Port Trust for establishing an LNG handling terminal at KPT. It is worth mentioning here that two LNG terminals are already operating, while licenses to another two had been issued by OGRA last year.

Source: Pro Pakistani

International banks like the China Exim Bank and the International Islamic Trade Finance Corporation (ITFC) are charging up to 6.5 percent interest per annum on lending to Pakistan while loans from Italy and China Development Bank are interest-free.

According to the official record on the terms and conditions of the donors’ lendings available with ProPakistani, Japan International Cooperation Agency (JICA) and Korea International Cooperation Agency (KOICA) are charging 0.10 percent and 0.1 percent respectively on their loans to Pakistan.

The International Islamic Trade Finance Corporation (ITFC), which is a subsidiary organ of the Islamic Development Bank (IsDB), has charged five to six percent per annum on its short-term trade financing (Murabaha). The repayment schedule and maturity period of the ITFC loan was one year, and there are no commitment charges, no service charges, and no penalty if it is not paid on time.

Additionally, four to 4.25 percent per annum is being charged on Turkish lending and there are commitment charges of 0.50 percent. There is also no grace period for the Turkish loan, no service charge, and no penalty if it is not paid on time. Also, the repayment schedule and maturity period of the Turkish loan are 10 to 14 years.

The China EXIM bank is providing a government concessional loan (GCL) at two percent interest, with a 5-7 year grace period, with management fee and commitment charges of 0.20 percent each. The repayment and maturity period of the lending is 15-20 years. The China EXIM bank offers a preferential Buyer Credit at two to three percent interest with the grace period of five to seven years, with the management fee and commitment charges of 0.20 percent each. The repayment and maturity period of the lending is 15 to 20 years.

The China EXIM bank is also providing Buyer Credit at Libore+220 t0 350 basis points (bps) or fixed 6.5 percent per annum, with a grace period of five to seven years. The lending has a management fee of 0.75 percent and commitment charges of 0.50 percent. The repayment and maturity period of the lending is 15-20 years.

Asian Infrastructure & Investment Bank (AIIB) is providing loans at 0.7 percent to 1.40 percent, depending on the tenure with a grace period of 5-7 years. The loan has a management fee and commitment charges of 0.25 percent each. The repayment and maturity period of lending is eight to twenty years.

Similarly, the International Fund for Agricultural Development (IFAD) is providing blend terms loan at 1.25 percent per annum with a grace period of five years. The repayment schedule and maturity period of the lending is 25 years (including five years grace period). The service charge for the loan is 0.75 percent.

The Islamic Development Bank(IDB) is providing project financing long-term loans (Istisna and Ijara) at an interest rate of three to four per annum, with a grace period of five years. The repayment schedule and maturity period of the lending is 15 years.

The Kuwait Fund is charging 1.5 percent to 2.5 percent on the loan having a grace period of six years. The loan also has an additional charge of 0.5 percent and a special commitment of 0.5 percent. The repayment schedule (maturity period) of the loan is 20 years.

The Saudi Fund is charging a two percent interest rate with a grace period of five years. The repayment and maturity period of the lending is 20 years with a two percent penalty if it is not repaid on time.

France/AFD is providing lending on six-month Euribor plus 48-125bp, with a three to seven year grace period. The repayment and maturity period of the lending is 15-30 years. As a penalty, late repayment interest will accrue without any formal notice from the lender within the limits permitted by law on interest overdue for one year or more at the interest rate applicable to the relevant interest period (late-payment interest) plus 3.5 percent (Default Interest).

The OPEC Fund for International Development (OFID) is providing project financing long-term loans at 1.7 percent per annum with a grace period of five years. The lending has commitment charges of one percent and it has a repayment and maturity period of 15 years.

Korea is charging 0.1 percent interest on its lending with a grace period of 10 years, with no commitment charge. The repayment schedule (maturity period) of the loan is 30 years and will charge a two percent penalty per annum if not repaid on time.

The Asian Development Bank (ADB) is providing Market Based Lending (MOL) of LIBOR six month+50 basis points, with a grace period of five years and 0.15 percent commitment charges on an undisbursed amount. The repayment schedule and maturity period of the loan is 25 years (including the grace period of 5 years). The ADB will also provide Concessional OCR lending(COL) at two percent per annum with a five-year grace period and 0.15 percent commitment charges on the undisbursed amounts. The repayment schedule and maturity period of the loan is 25 years (including the grace period of five years).

The Japan International Cooperation Agency (JICA) provides concessional loans to Pakistan at 1.30 percent, with a 10-year grace period and charging 0.10 percent commitment charges. The repayment schedule (maturity period) of the loan has 30 years (including a grace period of 10 years) and 0.1 percent service charges.

The JICA is providing a STEP loan at 0.10 percent with 10 years grace period and charging 0.10 percent commitment charges. The repayment schedule (maturity period) of the loan has 40 years (including a grace period of 10 years) and 0.1 percent service charges.

The World Bank (WB) is providing IDA loans, IDA(SUF) loans, and IBRD loans. It charges 1.25 percent for IDAs, with a five-year grace period and 0 to 0.5 percent commitment charges (currently set at zero percent). The repayment schedule (maturity period) of the loan is 25 years (including a five-year grace period). Additionally, the service charge is 0.75 percent.

The WB charges LIBOR+1.65 percent (maximum) for the IDA (SUF) loan, with a five-year grace period and 0 to 0.5 percent commitment charges (currently set at zero percent). The repayment schedule (maturity period) of the loan is 25 years (including 5 years grace period). For the IBRD loan, it charges LIBOR+1.65 percent (maximum), with a five-year grace period and 0 to 0.5 percent commitment charges. The repayment schedule (maturity period) of the loan is 30 years.

The Germany-KfW lending interest rate is 0.75 percent, with a grace period of six years. The loan has commitment charges of 0.25 percent, and its maturity period is 38 years. For the penalty, if not paid on time, the KfW may increase the rate of interest on arrears to the base rate plus three percent per annum for the period beginning with the assigned due date.

Source: Pro Pakistani