Category: Industry

The circular debt was recorded at Rs. 2,379 billion in the first quarter of the current fiscal 2021-22.

The power division has informed the Cabinet Committee on Energy (CCoE) that the circular debt reached Rs. 2,379 billion from July to September (Q1) for FY 2022 which includes Rs. 1,375 billion payables to power producers, Rs. 90 billion GENCOs payables to fuel suppliers and Rs. 915 billion parked in PHL.

Sources told ProPakistani that circular debt was Rs. 2,253 billion in Q1 FY 2021 and the increase this year is due to payments of power producers. Sources also said the ministry of power has projected the circular debt to fall to Rs. 1,856 billion from October 2021 to June 2022.

Interestingly, the power division had projected a decrease of Rs. 523 billion in circular debt in the remaining nine months of the current fiscal year however now they believe that the decrease could be Rs. 425 billion owing to payments to IPPs as well as PHL principal payments.

A handout issued by the planning commission states that a meeting of the CCOE was held under the Chairmanship of the Federal Minister for Planning, Development and Special Initiatives Asad Umar here in Islamabad on Friday.

Report on Developing Petroleum Reserves

The Petroleum Division presented a report on the development of strategic petroleum reserves. It was informed at the meeting that a working group comprising OGDCL, PSO, PEPCO, PARCO, TPPL, and PRL was constituted to develop a concept paper and study the strategic reserve requirement in the country. This working group has completed the initial assessment and a detailed feasibility study is being planned based on the recommendations of the working group.

The Maritime Ministry also developed a proposal on this, therefore, CCoE was directed to constitute a committee under OGRA with the Maritime Ministry and Petroleum Division as members for finalizing the proposal and reviewing the detailed framework for the establishment of strategic petroleum reserves.

CCoE also considered the summary presented by Power Division on standard security agreements for small Hydropower projects (up to 50MW) under the Power Generation Policy 2015. It was informed that the policy envisaged the development of large as well as small Hydel projects (SHPPs).

CCoE agreed with the framework for the ongoing and committed power projects. For small dams, the CCoE said that they have already directed and approved the policy for the creation of a market-based system so that the risk and liability do not rest with the taxpayer of Pakistan. These guidelines include the Competitive Trading Bilateral Contracts Market (CTBCM) and “Wheeling Policy” which have both been designed for this very purpose. It was further directed that this policy framework for small dams should be consistent with the overall policy direction.

CCoE also reviewed the Circular Debt Report September 2021 submitted by the Power Division and appreciated the reduced accumulation of circular debt.

The meeting was attended by Minister for Finance, Minister for Energy, Advisor to PM on Commerce & Industries, SAPM on CPEC, and representatives of regulatory authorities and senior officials of Ministries/Divisions also participated in the meeting.

Source: Pro Pakistani

In the face of the COVID-induced contraction of 0.47 percent in the financial year 2019-20, Pakistan’s economic growth rebounded to 3.94 percent, well above the target set for the financial year 2020-21 of 2.1 percent.

According to the Annual Performance Review FY21, released by the State Bank of Pakistan (SBP), the year remained challenging as the global economy adjusted to the economic and financial challenges posed by the pandemic throwing multiple waves of virus outbreaks and ensuing containment measures. Amidst such testing times, Pakistan’s economy however strongly rebounded compared to the previous fiscal year as well as in terms of the targets set for FY21 at the beginning of the fiscal year.

As per the performance review, SBP’s supportive monetary policy stance including quantitative measures to inject liquidity in a timely manner, supplemented by fiscal policy measures, provided a targeted, dynamic, and well-coordinated policy response to COVID. These measures helped address the imminent liquidity and solvency concerns of businesses and households that had been emerging since the virus outbreak in March 2020 and supported the better than anticipated economic performance during the FY21.

SBP’s Measure To Support Economy

SBP’s quantitative measures were well-targeted, well-diversified across beneficiaries and temporary in nature; and in aggregate provided liquidity support of around 5.0 percent of GDP. To ease off the challenging business environment, SBP swiftly introduced concessional refinance schemes to prevent layoffs (Rozgar Scheme); facilitate healthcare institutions to upscale their facilities (Refinance Scheme to Combat COVID-19); and encourage firms to undertake long-term investments (under the Temporary Economic Refinance Facility).

The export-related procedural requirements were relaxed to counter the limited mobility amidst unfolding national lockdowns and the scope for concessionary Export Finance Scheme (EFS) was expanded. In addition, SBP allowed bank loan restructuring and loan deferment for firms including Small and Medium Enterprises (SMEs) and households.

Furthermore, the anchoring of inflation expectations, despite some upward pressures from supply management issues and surge in international commodity prices, allowed the Monetary Policy Committee (MPC) to keep the policy rate unchanged throughout the year. The adoption of the forward guidance on Monetary Policy by SBP since January 2021 played a major role in reducing short-term policy uncertainty for stakeholders.

Pakistan’s external indicators also improved significantly in FY21 as SBP’s foreign exchange grew more than 40 percent and the country’s current account deficit plummeted to a 10-year low mainly because of record-high worker’s remittances and export receipts.

While market-determined exchange rate improved export competitiveness, the financial incentives announced by SBP and the government for remittance processors under the Pakistan Remittance Initiative (PRI) encouraged the use of formal banking channels for remitting funds by emigrants, which paved the way for increasing inward remittance to USD 29.4 billion during the year.

The inflation also moderated to 8.9 percent in FY21, well within the target range of 7-9 percent announced by SBP. Similarly, other key macro-economic balances including current account, fiscal balance, and the country’s foreign reserves improved during the FY21.

Financial Inclusion

With regard to the Payments Infrastructure of the country, SBP undertook major initiatives aimed at financial inclusion, digital onboarding of customers, enabling remote banking, providing digital modes of investments to customers through banking channels, and improving payment systems efficiency.

Financial inclusion remained the top strategic priority at SBP, in line with the vision of the National Financial Inclusion Strategy. During FY21, SBP’s special focus remained on rural, underserved, and unbanked areas, while issuing licenses for the opening of new branches of commercial and microfinance banks. With regards to credit disbursement, SBP had a renewed focus on underserved economic segments, especially housing and construction finance, agriculture finance, and finance for micro, small and medium enterprises. Moreover, the third five-year strategic plan for the Islamic banking industry was issued by SBP in April 2021 to set a strategic direction and strengthen the existing growth momentum of the industry.

As for its regulated entities, SBP during FY21 implemented Risk-Based Supervision Framework, a forward-looking framework that would allow the SBP to pursue a coherent risk-based approach through proactive identification of risks, and take timely mitigation measures to ensure financial stability in the country.

According to the annual review, to achieve its broad strategic goals and strengthen organizational efficiency, SBP took major initiatives during FY21 aimed at workforce rationalization, attaining gender diversity, automation of process workflows, strengthening cyber security and risk management framework, and improving transparency through enhanced communication with external stakeholders.

Source: Pro Pakistani

The Pakistan Rupee appreciated against the US Dollar (USD) for the third consecutive day today. It gained 61 paisas against the dollar and closed at 171.65.

Yesterday, the local currency gained 52 paisas against the US Dollar and closed at 172.26 after registering its largest increase in value since April 2020 on Wednesday.

It also lost 84 paisas against the USD to hit an all-time low at 175.27 on Tuesday.

The gains came after Saudi Arabia’s support package of $4.2 billion calmed and bolstered the market sentiment. Similarly, the markets are hopeful that the discussions between the government and the International Monetary Fund (IMF) will conclude amicably and secure further liquidity.

The local unit has depreciated by about 12 percent amid high international commodity prices and a widening current account deficit in the past few months.

According to Capital States, the Pakistani Rupee has appreciated 1.35 percent on a week-0ver-week basis.

It gained 28 paisas against the Pound Sterling (GBP), eight paisas against the Canadian Dollar (CAD), 16 paisas against the Saudi Riyal (SAR), and 17 paisas against the United Arab Emirates Dirham (AED) today.

On the other hand, it lost 35 paisas against the Euro and 10 paisas against the Australian Dollar (AUD).

Source: Pro Pakistani

Oil prices plunged to their lowest in two weeks as US crude inventories rose more than expected, and Iran announced that it would resume talks on its nuclear deal.

Brent crude dropped to $83.71 a barrel after falling to a two-week low at $82.32. Similarly, US West Texas Intermediate (WTI) crude fell to $82.80 a barrel, having touched a two-week low of $80.58 earlier in the day.

Iran’s diplomat, Ali Bagheri Kani, announced on Wednesday that the country is set to resume discussions on a nuclear deal with world powers that fell through back in 2015. A deal could help lift sanctions on Irani oil exports that were imposed by former US President Donald Trump.

However, even if an agreement is reached soon, it will take some time for Iran’s oil to return to the international markets.

Meanwhile, the US Energy Department said that crude stocks rose by 4.3 million barrels last week, which is more than double what was forecasted by analysts. The gain was attributed to a spike in oil imports along with slow refinery processing, which helped build up stockpiles, according to Citi Research analysts.

However, gasoline stocks fell by 2 million barrels to their lowest level in about four years.

Amid the global energy crunch, oil and gas prices have surged to record highs in the past few months. In a bid to cope, the Pakistani government hiked petrol prices by Rs. 10.49 to a high of Rs. 137.7 per liter, while the price of high-speed diesel was increased by Rs. 12.49 to Rs. 134.48 per liter. The Oil and Gas Regulatory Authority expects prices to continue to rise till March 2022.

Source: Pro Pakistani

Over 30 participants competed for seed funding for their businesses in the first U.S. Mission Pakistan Academy for Women Entrepreneurs program on 28 October.

A panel of judges selected the top three proposals after reviewing their business plans and hearing their pitches. Each winner will receive $5,000, $4,000, and $3,000, respectively, to grow or launch their businesses in Pakistan.

Maryam Iqbal won first prize for her business ‘Global Nomad’ which promotes the crafts of Khyber Pakhtunkhwa. Abira Younus came second for her business ‘Baby Steps’ — a daycare and early childhood education center. Madeeha Malik took third place for ‘Dhaaga Clothing’ which provides flexible clothing designs while offering screening services for eating disorders.

With mentoring and guidance from established Pakistani entrepreneurs, 61 female entrepreneurs graduated from the AWE program in early October. After completing the AWE training, participants competed for seed funding to implement what they learned during the course.

Chargé d’affaires, Angela P. Aggeler, congratulated the graduates during the 2 October closing ceremony, and said, “Your success is Pakistan’s success, and we are proud to support you to become Pakistan’s dynamic entrepreneurs, business leaders, and economic influencers”.

AWE is centered around a three-month, rigorous online course called DreamBuilder, developed by Arizona State University’s Thunderbird School of Global Management and American natural resource company, Freeport McMoran. It is designed to cultivate entrepreneurial know-how, help women entrepreneurs connect with funding opportunities, enhance opportunities for business expansion, and increase the likelihood of entrepreneurial success.

Four of the U.S. Mission Pakistan’s Lincoln Corners — public event spaces that connect Pakistanis and Americans — in Lahore, Rawalpindi, Larkana, and Peshawar led the AWE Pakistan program with support from the Pakistan American Cultural Center and the DOVE Foundation.

The AWE graduates are now part of the Pakistan-U.S. Alumni Network (PUAN) and the global community of the U.S. exchange program alumni.

Source: Pro Pakistani

Qatar, the world’s largest exporter of liquefied natural gas (LNG), will invest in Pakistan’s next import terminal to serve one of the fastest-growing markets for supercooled fuel.

According to persons acquainted with the situation, Qasim Terminal Holding Co., a subsidiary of Qatar Energy, has approached the government of Pakistan for permission to acquire stakes in Energas Terminal Pvt, reported BloombergNEF.

Qatar Energy and Energas have yet to comment with reference to this development, while the Competition Commission of Pakistan has also declined to make an official statement in this regard.

The report says that the development has taken place as Qatar expects to significantly boost production over the next 10 years while hunting for new fuel buyers. With its latest long-term arrangement set to begin this year, Qatar is currently Pakistan’s largest gas supplier.

With a capacity to import 1 billion cubic feet of gas per year, the Energas terminal will be the country’s largest. Pakistan has two LNG terminals, and Energas and Mitsubishi Corp. of Japan are competing to build the country’s first two private plants.

It has been determined that over the next five years, Pakistan, Bangladesh, and Thailand will dominate LNG expansion in upcoming Asia markets. According to BloombergNEF, the LNG imports of these countries will nearly quadruple between 2021 and 2025.

Source: Pro Pakistani