Pakistan Daily Economy Update - 11 July

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1. Jul . 11, 2017 KCCI - eBulletin K-Electric announces fresh $ 1Bn investment K-Electric, currently on the crossroads of a change in management to China’s Shanghai Electric Power (SEP), has announced to invest $ 1Bn in a 900MW LNG-based power plant at its Bin Qasim, expected to start commercial production by summer of 2018. The project also includes simultaneous upgrade to associated transmission infrastructure. The statement from KE also reads that SEP has also expressed complete confidence in the project and fully endorses the vision for Karachi’s transformation. The addition of power from the project would turn Karachi into a surplus power city from a deficit of around 400-500MW at present. Tribune. Workers’ remittances down 3% in FY17 Inflow of workers' remittances declined by 3% to $ 19.30Bn in FY17 compared with $ 19.92Bn received during FY16, depicting a decline of $ 614Mn, mainly due to slowing of economy due to lower oil prices. The decline has been observed from all major corridors, including Saudi Arabia, UAE, US and UK, however, different factors are responsible for each destination. Workers' remittances from US fell 3.24% to $ 2.44Bn during FY17 compared to $ 2.53Bn in same period of last fiscal year. Similarly, workers' remittances from UK decreased to $ 2.34Bn as against $ 2.58Bn in FY16 while with 8.35% decline, remittances inflows from Saudi Arabia stood at $ 5.47Bn during FY17 compared to $ 5.97Bn in same period of last fiscal year. BR. PKR: Inquiry launched Following the directives of Finance Ministry, State Bank of Pakistan (SBP) has initiated an inquiry into Jul. 5, 2017 rupee plunge which will be completed within stipulated time period given by the ministry. For the first time in the history of the SBP, an inquiry on deterioration of Pak Rupee vs. US greenback exchange has been initiated on the directives of the federal finance minister. An SBP officer will investigate the matter and accordingly a report will be submitted to the ministry of finance after approval of governor SBP Tariq Bajwa. BR. Price of LNG cheaper than LPG’s: Khaqan Petroleum Minister Khaqan Abbasi has informed a parliamentary panel that LNG is available to domestic consumers at cheaper rate than LPG. Briefing the National Assembly's Standing Committee on Petroleum, the Minister said that the LNG price for domestic consumers is PKR 750/MMCFD as compared to home reach price of LPG PKR 2,000/MMBTU and natural gas price that is PKR 120/unit. BR. Pakistan to become major LNG importer by 2022 Pakistan says it could become one of the world’s top-five buyers of LNG, with Petroleum Minister Shahid Abbasi predicting imports could jump more than five-fold as private firms build new LNG terminals while outlining Pakistan’s ambitious plans, if fully implemented, he said that Pakistan could shake up the global LNG market. Mr Abbasi said that imports could top 30Mn tons by 2022, up from just 4.5Mn tons currently. Dawn. One million new gas connections recommended The National Assembly Standing Committee on Petroleum and Natural Resources has recommended Ogra to increase the number of new domestic gas connections to 1Mn per year. The committee was apprised that Ogra had allowed 0.5Mn new domestic connections to gas distribution companies per year. However, due to huge number of pendency, the gas companies were unable to meet the demand. The committee was further apprised that 200 connections were allowed to be provided to new localities. Dawn. Energy, transport and social sectors: ECNEC approves over PKR 224Bn uplift projects An ECNEC meeting, presided over by the Finance Minister Ishaq Dar, has approved over PKR 224Bn development projects for energy, transport and social sectors submitted by Planning Ministry. The ECNEC approved Koto Hydropower Project at a revised cost of PKR 14Bn for construction of 40.8MW power station on Panjkora River. The meeting also approved the Peshawar Sustainable Bus Rapid Transit Corridor Project of PKR 49.35Bn for construction of 25.8-km long two-lane signal\ free bus rapid transit (BRT) main corridor with 32 stations. BR. Value Change Daily Crude (AU'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 105.22 106.30 46,274 -4.50 44.68 1,213.4 43,028 15.59 6,537 6.15% Forex Reserves 30-Jun $ Bn 21.37 -0.91% 0.14% 2.33% NM** -1.17% -0.90% -0.10% -2.41% 0.82% 0.01% WoW 0.04% YoY -3.08% -3.13% 20.60% -42.12% -132.03% Jul-Jun 17 Remittances $ Bn 19.30 Jul-May 17 Exports* $ Bn 18.54 Jul-May 17 Imports* $ Bn 48.54 Jul-May 17 Trade Balance* $ Bn -30.00 Jul-May 17 Current Account $ Mn -10,641 % 4.16 Avg. CPI-FY17* Jul-Jun 17 May-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 Jul-16 GBP, 10-Jul-17, 136.0 EUR, 10-Jul-17, 120.3 USD, 10-Jul-17, 105.6 Oct-16 USD Jan-17 GBP Apr-17 Jul-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "A man always has two reasons for doing anything: a good reason and the real reason." J. P. Morgan Chart of the Day TOTAL DEPOSITS OF SCHEDULED BANKS 6,403 4,661 5,599 3,832 2,787 3,461 3,000 2,007 5,000 4,120 7,000 7,316 9,000 8,082 11,000 10,060 13,000 11,981 15,000 1,428 Inbox postpones book-building amid volatility, uncertainty Inbox Business Technologies has postponed the book-building process and public subscription process for the time being, keeping in view rising political uncertainly within the country. The company was scheduled to hold the book-building for the initial public offering on July 11-12, 2017. Book-building is a Dutch-bidding process to determine a strike price to sell company’s shares to high net-worth individual, institutional and retail investors. Later on, the firm would get listed at Pakistan Stock Exchange and its shares would remain available for public trade. Tribune. Unit 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 10-Jul 1,700 Sri Lanka to purchase 25,000 tons of rice Pakistan has agreed to export 25,000 tons of rice on an urgent basis to Sri Lanka which aims to meet its domestic shortfall due to drought. The understanding was reached in a meeting between Secretary Commerce Younus Dhaga and his Sri Lankan counterpart Chinthaka S Lokuhetti. An official statement issued after the meeting said Sri Lanka had requested to procure 300,000 tons rice from Pakistan on government-to-government basis. Dawn. Date / Period 2,377 Country seeking further assistance from ITC While speaking at the 51st annual session of the Joint Advisory Group (JAG) of International Trade Centre (ITC) held in Geneva, Commerce Minister Khurram Dastgir has said that ITC has been supporting trade and private sector development in Pakistan since 2004 through two Trade-Related Technical Assistance projects funded by the European Union (EU). The Minister further said that Pakistan is looking forward to further assistance from ITC to strengthen the capacity of trade support institutions to undertake trade facilitation efforts. The Nation. List of Indicators USD-Interbank USD-Open MKT KSE-100 index FIPI 9,141 Private sector opposes EDB disbandment Another tussle is shaping up between the government and the business community involving manufacturers. PM Nawaz Sharif has issued a directive to disband the Engineering Development Board (EDB) and disperse its powers amongst the Ministry of Industries, FBR and Ministry of Commerce. Members of the EDB board of management, excluding those in government, are of the opinion that the board should be strengthened and restructured, not shut down. The private-sector members are of the view that the engineering sector could play a bigger role than the textile sector. They said the worth of the engineering goods’ market in the world is $ 4Tn compared to the $ 500Bn textile market, which reflects the strength of the engineering sector. Dawn. Economic Indicators 1,000 Values in PKR Bn Value in PKR Bn Source: KCCI Research; SBP Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk