Pakistan Daily Economy Update - 30 March

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1. Mar . 30, 2018 KCCI - eBulletin KCCI to remain open until 5 pm today for membership renewal The KCCI has informed all its members that its Membership Department will remain operational on Friday, 30th Mar’18, till 5:00 PM for membership renewal. The Membership Department will remain operational on Friday, 30th Mar’18, from 9:00 AM to 12:30 PM and after Namaz-e-Jumma, the process of membership renewal will resume from 2:30 PM to 5:00 PM. As per Trade Organizations Act 2013, the last date for renewal of membership is 31st Mar’18 (Saturday). Economic survey 2017/18 to be released on April 26; growth estimated at 5.7% The govt. is all set to release economic survey for the current FY18 on 26th Apr’18 (just one day ahead of the upcoming budget scheduled on 27th Apr) with annual growth estimated at up to 5.7%. Efforts are also underway to publish economic cost of war losses and latest poverty figures in the upcoming economic survey. The National Accounts Committee is expected to hold a meeting in the 2nd week of April’18 second week of next month to assess the GDP growth rate for the outgoing fiscal year. The News. Industry suffers as gas dispute erupts Industrial activity in the port city is caught in the crossfire as a dispute over payment arrears between SSGCL and K-Electric Ltd. (KEL) erupted suddenly. KEL is SSGC’s largest customer however it has claimed that its request for enhancement of natural gas supply, due to onset of summer demand, has been ignored. The current gas supply to KEL is 90mmcfd however it needs at least 190mmcfd to operate Bin Qasim Power Station (BQPS), which runs only on gas. Dawn. Rising mercury, power outages hit businesses, residences alike Small businessmen and residents have expressed concern over long load-shedding in commercial and residential areas of Karachi which will certainly have serious negative impact on their businesses and sufferings of people. They have sought the intervention of federal and provincial govts to direct K-Electric to immediately restore power to all the commercial and residential areas of the city as the load-shedding would cause irreparable financial losses. They urged K-Electric to run its units on furnace oil if it cannot get sufficient quantity of gas to operate its generators in full swing. BR. CCoP likely to clear Abraaj-SEP deal The Cabinet Committee on Privatisation (CCoP) is likely to clear deal between M/s Abraaj and China's Shanghai Electric Power (SEP) to acquire 66.4% stake for $ 1.77Bn. The agenda of the CCoP meeting will be request for grant of National Security Certificate to KES Power, holding company of M/s Abraaj, for sale of all its 66.4% shareholding in KE". If the CCoP clears the deal, then it will be submitted to the federal cabinet for ratification. A team of Abraaj Group has held a number of meetings with the govt. to get clearance of its deal with SEP. The Privatization Commission has prepared a summary for the CCoP and shared it with the stakeholders seeking positive remarks on the deal and the entity has completed most of the documentation. BR. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 29-Mar 115.30 116.25 -0.17% 0.43% Crude (MY'18) 29-Mar 29-Mar 29-Mar 28-Mar PKR PKR Pts. $ Mn $/bbl 45,490 9.36 64.63 0.70% NM** -0.08% Gold (MY'18) Gold (10g) Local 28-Mar 29-Mar $/oz PKR 1,332.1 50,400 -0.89% -0.34% Silver (MY'18) Cotton(KHI)-40 kg 28-Mar 29-Mar $/oz PKR 16.27 7,931 -1.15% -1.33% Kibor-6M 29-Mar % 6.62 $ Bn 17.95 0.03% WoW -0.72% Remittances 22-Mar FY18 Jul-Feb 18 $ Bn 12.83 YoY 3.41% Exports* Imports* Jul-Feb 18 Jul-Feb 18 $ Bn $ Bn 14.85 39.13 11.66% 17.19% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Feb 18 Trade Balance* $ Bn -24.28 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 1.94 Jul-Feb 18 Jul-Jan 18 LSM Growth* % 6.33 % 3.84 Jul-Feb 18 Avg. CPI Discount Rate % 6.00 Jan-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 175 PKR 80Bn settlement plan in jeopardy The PKR 80Bn plan to settle circular debt is suffering delay as the Auditor General of Pakistan (AGP) is reluctant to conduct pre-audit of the debt and is not responding to the Power Division to make way for the payment. The ECC of the cabinet had approved the plan on 7th Mar’18 and decided to immediately pay PKR 80Bn to power producers and fuel suppliers, out of PKR 526Bn worth of dues, aimed at easing their financial constraints. The incumbent govt. had also cleared PKR 480Bn in the power sector debt in one go in 2013, but the AGP at that time had raised objection to payment of huge amount and said it was released to the energy companies without conducting the audit of dues against each company. Tribune. 165 Kapco challenges PKR 28Bn of power outage fine in international court Pakistan’s largest independent power producer Kot Addu Power Company Limited (Kapco) has challenged a PKR 27.72Bn penalty imposed by the govt. on it for short supply of electricity. The case has been taken to Singapore International Arbitration Centre against Wapda and Central Power Purchasing Agency Guarantee Limited (CPPA-G) under the arbitration rules of the International Chamber of Commerce. Additionally, the govt. of Pakistan has also been made a party to the arbitration as it had issued a guarantee in favour of the company. Kapco has contended that short supply was due to cash flow constraints of the company as a result of default by Wapda in making timely payments. The News. 105 Sale to be concluded on April 19: Govt gets nine bids in 100MW solar power plant privatization The privatization of the 100MW Quaid-e-Azam Solar Power Plant (QASP), for which nine firms have been invited to submit bids, is th \ likely to be completed on 19 Apr’18. The govt. of Punjab, which currently owns 100% of Quaid-e-Azam Solar Power Plant, seeks to divest its entire stake along with management control. The News. Provinces blame center for failing to form new NFC Award Provinces have blamed the federal govt. for the deadlock over the new NFC Award. The federal govt. had proposed cutting down the size of the divisible pool by 7%. Sindh CM Murad Ali Shah has already rejected the proposal of allocating funds from the federal divisible pool for the security arrangement of CPEC-related projects and for the development of Fata and other areas. The govt., for the consecutive 3rd year, extended the 7th award for the ongoing FY18 after failing to constitute the new NFC Award. Under the current NFC Award, Punjab gets 51.74% share, Sindh 24.55%, Khyber-Pakhtunkhwa 14.62% and Balochistan 9.09%. The Nation. Textile firms sign 63 deals worth $ 245Mn Textile sector of the country signed 63 deals with foreign counterparts worth $ 245Mn during the 3-day 19th Textile Asia Exhibition. The main share of the deals was that of China, which signed agreements worth $ 150Mn. Around 450 companies participated in the exhibition and showcased around 600 items at 800 different stalls. Around 1,200 foreign delegates attended the expo. The News. Railways upgrade: Pakistan delays approval of Mainline-I amid differences over cost Pakistan has again delayed approval of the Mainline-I (ML-1) railway project after Beijing tagged phase-I of the scheme at $ 4Bn, which is $ 627 Mn higher than Pakistan’s estimates. The difference over the cost and scope of the ML-I project has also blocked the approval of concessionary loan by China. According to Framework Agreement of the ML-I, China will provide 85% of the project cost as concessionary loan. The project has been declared strategically important by both the countries. Tribune. Foreign reserves decline to $ 17.94Bn Pakistan’s liquid foreign reserves decreased to $ 17.95Bn on Mar. 22, 2018. During the week, SBP's reserves declined by $ 168Mn to $ 11.78Bn while the foreign reserves held by the commercial banks amounted to $ 6.17Bn. The Nation. Urea prices may increase by PKR 100 per bag as subsidy refused The domestic fertilizer industry is likely to increase urea prices by PKR 100 per bag as Finance Ministry has refused to allocate supplementary grant for subsidy of PKR 5Bn citing financial constraints. Ministry of National Food Security and Research (MNFR) had requested that funds of PKR 4.71Bn (PKR 4.69Bn as subsidy from Jul.’17 to Dec.’17 and PKR 8.25Mn as fee for the qualifying firm of third party validation), be allocated and released, immediately so as to ensure the smooth supply of fertilizer in the local market. BR. -20.85% -50.03% 15.64% GBP, 29-Mar-18, 163.4 155 145 EUR, 29-Mar-18, 142.5 135 125 115 USD, 29-Mar-18, 115.7 95 Mar-17 USD Jun-17 GBP EUR Sep-17 Dec-17 Source: KCCI Research ; Oanda.com Quote of the Day "Generosity is giving more than you can; pride is taking less than you need." Khalil Gibran Chart of the Day 6.70% TOTAL REVENUES AS % OF GDP (1HFY13 - 1HFY18) 6.60% 6.60% 6.50% 6.50% 6.40% 6.40% 6.30% 6.20% 6.20% 6.20% 6.10% 6.00% 6.00% 5.90% 5.80% 5.70% 1HFY13 1HFY14 1HFY15 1HFY16 1HFY17 1HFY18 Source: KCCI Research, MoF 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