Chili Varieties, WB Funds, Dust Storms in Sindh, Punjab Water Shortage, IMF on Pak Imports, Russia-Ukraine War Updates, UN Prioritizes Cryosphere

TOPLINE

●?????A significant increase in chili crop yield through the successful cultivation of Chinese hybrid varieties in Sindh and Punjab has been reported, while the LHC was informed that the joint venture agreement between the governor of Punjab and the Pakistan Army for corporate agriculture farming was not legally sustainable.

●?????The World Bank will provide approximately Rs 16 billion in funds for upcoming development schemes under the PCM in various cities and towns in Punjab.

●?????Dust and hailstorm hit lower areas of Sindh province, causing significant damage to civic infrastructure and resulting in the loss of lives, including 3 children who died when a house collapsed in Kotri. While Punjab irrigation department reported that the water shortage for the Kharif season has increased to 47%, higher than the earlier estimate of 27%.

●?????Imran Khan has accused efforts to create a "king's party" within PTI but expressed confidence that such attempts have failed in the past and would continue to do so while PM Shehbaz Sharif declined Khan's offer for talks.

●?????IMF Resident Representative in Pakistan, expressed concerns about import suppression leading to shortages, plant closures, and a negative impact on the economy, while Shehbaz Sharif has instructed the finalization of proposals from the industrial sector for inclusion in the next fiscal year's budget.

●?????Ukrainian drones targeted districts in Moscow, including areas where President Vladimir Putin and the elite have residences.

●?????The United Nations' World Meteorological Organization has declared the cryosphere, including the melting of sea ice, glaciers, and permafrost, as a top priority due to its global threat.

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COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

●?????Successful Chinese Hybrid Chilies: A local agriculture research company, Guard Agricultural Research & Services, has reported a significant increase in chili crop yield through the successful cultivation of Chinese hybrid varieties in Sindh and Punjab. The company achieved a yield of 75 maunds per acre, three times higher than the yield of indigenous seeds. The Chinese hybrid varieties, which have fruits over six inches long, were cultivated on 7,500 acres and are planned to be expanded to 30,000 acres in the next season in collaboration with the Chinese company LTEC. The chili yield will be purchased from the growers and exported to China. [Dawn]

●?????AI-Based Sweetness Classification: A team of Pakistani scientists, led by Dr Ayesha Zeb, has developed an artificial intelligence-based visual classification method that can accurately determine the sweetness of native citrus fruits. The team achieved over 80% accuracy in predicting fruit sweetness using a handheld spectrometer and near-infrared spectroscopy, without causing any damage to the fruit. [ET] [MM]

●?????Citizens Unite to Boycott Chicken: A social media-driven chicken boycott campaign has been launched in response to the soaring chicken prices in the garrison city. Citizens and civil society organizations have jointly initiated the 15-day campaign to protest against the high costs of chicken, which have reached historic highs due to factors such as increased costs of chicken feed and medicines. The campaign aims to encourage citizens to abstain from consuming chicken and opt for alternatives like mutton or beef, with the hope that it will lead to a decrease in chicken prices. [ET]

●?????Challenges to Punjab's Corporate Army Agriculture Venture: The Lahore High Court was informed that the joint venture agreement signed between the governor of Punjab and the Pakistan Army for corporate agriculture farming was not legally sustainable. The advocate representing a public interest petition argued that the army was not authorized to engage in commercial activities or claim state land for corporate farming, pointing out various anomalies in the agreement. The court will resume the hearing, and the petition questions the caretaker government's authority to make such a decision and its violation of the Doctrine of Public Trust. [Dawn]

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AGRI-INPUTS, WEATHER, WATER & POWER

●?????Dust and Hailstorm Ravages Sindh: A powerful dust and hailstorm hit lower areas of Sindh province, causing significant damage to civic infrastructure and resulting in the loss of lives, including three children who died when a house collapsed in Kotri. The storm was followed by drizzle in Hyderabad district, and the power supply network of the Hyderabad Electric Supply Company (Hesco) was severely affected by strong winds and hail. [Dawn] [ET]

●?????Water Scarcity Surges in Punjab: The Punjab irrigation department reports that the water shortage for the Kharif season has increased to 47%, higher than the earlier estimate of 27%. To manage water supplies for the sensitive cotton crop, the department is relying on the Mangla reservoir, as the actual river flows remained 20% lower than expected between April 1 and May 20, resulting in a total scarcity of 47%. [Dawn]

●?????Investment Opportunities in Gwadar: The Balochistan Chief Minister has approved the special economic district (SED) status for Gwadar, aiming to attract investors and accelerate development in the region. The move comes as part of efforts to make the China-Pakistan Economic Corridor (CPEC) successful and has already created job opportunities. The SED will provide incentives, tax exemptions, and subsidies to investors, boosting sectors such as trade, tourism, real estate, and hoteling. [ET]

●?????Port Qasim Power Plant Declares Payment Default: Port Qasim Electric Power Company Ltd (PQEPC), the operator of a coal-based power plant in Pakistan, has issued a formal notice of payment default to the Central Power Purchasing Agency (CPPA) due to an outstanding amount of Rs 77.3 billion ($263.5 million) as of May 15. The IPP, owned by Sinohydro Resources Ltd and Al Mirqab Capital Ltd, has invoked the default clause in its power purchase agreement, which stipulates that a failure to pay the undisputed amount within 35 days of the notice will be considered a default by the power purchaser. [Dawn]

●?????Hydro & Solar Projects: The Khyber-Pakhtunkhwa Secretary of Energy and Power has stated that issues with the Centre regarding energy projects will be prioritized and resolved through high-level discussions. Currently, the province is actively working on 42 hydro and solar electricity projects, managed by the Pakhtunkhwa Energy Development Organization (PEDO), which has already completed several profitable ventures. These projects, along with upcoming ones, are expected to generate a total of 778 MW of electricity and bring significant annual income to the province. [ET]

●?????Power Holding Limited's Debt Extension: The Finance Division has extended the Letter of Comfort (LoC) to the Power Division until June 28, 2023, for rescheduling Power Holding Limited's debts amounting to Rs 283.287 billion. The debts are owed to Habib Bank Limited, Allied Bank of Pakistan, National Bank of Pakistan, and Meezan Bank Limited. The Finance Division also cleared a portion of the outstanding debt in the previous fiscal years, and the Power Holding Limited's debt stock as of June 2020 was Rs 1.004 trillion. [BR]

●?????Promoting Circular Economy: The multi-stakeholder packaging alliance, CoRe, has presented recommendations to the government for the upcoming federal budget, urging the availability of green financing, a tax holiday for recycling projects, and incentives for waste-free infrastructure to promote a circular economy. The alliance emphasized the importance of government support in facilitating sustainable practices and investment in formal collection and recycling infrastructure, highlighting the potential economic and environmental benefits of such initiatives. [The News]

●?????Rising Power Theft Menaces Economy: Power theft in the country continues to be a significant problem, with an estimated Rs 380 billion worth of electricity stolen in the current fiscal year (2022-23), and it is projected to increase to Rs 520 billion in the following year. The Secretary Power Division informed the National Assembly Standing Committee on Energy that the theft was mainly carried out through illegal connections (Kundas) and tampering with meters, and the increasing power tariff has contributed to the escalation of the issue. The Power Division is considering various options to address this problem and will present recommendations in the next committee meeting. [The News]

●?????PMA Urges Government Action: Health experts associated with the Pakistan Medical Association (PMA) have expressed concerns over the recent deaths caused by Naegleria fowleri in Karachi and urged the government to ensure the supply of properly chlorinated water to citizens. They highlighted that the victims did not have a history of swimming and the infection was likely due to the use of contaminated tap water, emphasizing the need for improved water filtration and distribution systems managed by the Karachi Water & Sewerage Board (KWSB) to prevent further cases and the spread of harmful diseases. [Dawn]

●?????World Bank Funds Punjab's Development: The World Bank will provide approximately Rs 16 billion in funds for upcoming development schemes under the Punjab Cities Programme (PCM) in various cities and towns in Punjab. The current development projects under the PCM, in collaboration with the World Bank, are nearing completion, with schemes worth Rs 23 billion being implemented in 16 cities. The projects include water supply, drainage, solid waste management, road construction, parks, and bus stands, among others. [Dawn]

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AGRI UPDATES & PAKISTAN POLICY

●?????Imran Khan Denounces 'King's Party': PTI Chairman Imran Khan has accused efforts to create a "king's party" within PTI but expressed confidence that such attempts have failed in the past and would continue to do so. He questioned the effectiveness of a manufactured coalition in addressing the country's crises, emphasizing that effective governance should come from popular support rather than establishment backing. [Dawn] [ET]

●?????Shehbaz Declines Imran's Offer: Prime Minister Shehbaz Sharif categorically declined Imran Khan's offer for talks following the May 9 riots and violent protests staged by the PTI. The Prime Minister stated that accountability should be held for those responsible for damaging public and private property, asserting that dialogue cannot be conducted with individuals disguised as politicians who engage in anarchistic and arsonistic behavior. [Dawn] [ET]

●?????Pakistani Currency's Fragile Recovery: The Pakistani currency experienced a slight recovery of 0.02%, reaching Rs 285.35 against the US dollar, but financial experts predict another round of depreciation as the revival of the IMF loan program approaches. The IMF has reminded the government to reinstate the market-determined exchange rate as one of the conditions to resume the loan program, which could potentially lead to a depreciation of 5-10%, pushing the rupee to a new record low within the range of Rs 300-310/$. [ET]

●?????Import Suppression & Economic Impact: Esther Perez Ruiz, IMF Resident Representative in Pakistan, expressed concerns about import suppression leading to shortages, plant closures, and a negative impact on the economy. Pakistan witnessed significant declines in imports (28.44%), exports (11.71%), and the output of the Large Scale Manufacturing Industry (8.11%) during the first ten months of the fiscal year. The Ministry of Finance attributed the lower tax revenue to the economic slowdown and import compression policy, resulting in a 5% decline in customs duty collection due to reduced imports. [BR] [BR]

●?????Refund Delays Worry Textile Exporters: Textile exporters in Pakistan are expressing concerns over the lengthy refund process by banks for marked lien amounts, leading to significant exchange losses. The implementation of the State Bank of Pakistan's FE Circular No 02 of 2023 has created confusion among banks regarding the return of these amounts to the exporters, causing distress in the industry. Banks mark the received amount as lien, allowing them to utilize it for future Letter of Credits (LCs) until the debt is fully paid off. [ET]

●?????Prioritizing Economic Growth: Prime Minister Shehbaz Sharif has instructed the finalization of proposals from the industrial sector for inclusion in the next fiscal year's budget. The prime minister emphasized the need to prioritize the development of the economy, increase domestic exports, and remove obstacles between small, large, and export industries. He also highlighted the government's efforts to provide cheap energy, facilitate easy loans for small industries, and ensure collaboration with industrialists and businessmen for the betterment of the country. [BR]

●?????RRMC Calls for Increased Dividend Tax: The Reforms & Revenue Mobilization Commission (RRMC) has recommended a higher tax rate on dividends for companies paying tax under the Final Tax Regime (FTR) on the export of goods/services. The rationale behind this recommendation is to recover a portion of the tax benefit received by the company from its shareholders. The RRMC suggests that higher tax rates on dividends should be applied proportionately to the extent of the FTR tax liability, ensuring equity between companies and individuals earning from exports. [BR]

●?????SSGC Expands into Alternate Energy: The Sui Southern Gas Company (SSGC) has reduced the unaccounted for gas (UfG) by 33% from 78 bcf to 52 bcf. Efforts have been made to reduce UFG in Karachi and interior Sindh, but challenges persist in Balochistan. Additionally, SSGC is diversifying its business through SSGC Alternate Energy and declared a profit of Rs 1.9 billion for the fiscal year 2020-21 after incorporating legacy losses. [BR]

●?????Caretaker CM on Newspaper Industry Issues: Caretaker Chief Minister of Punjab, Mohsin Naqvi, expressed optimism about the improvement of the country's economic situation and assured a delegation from the All Pakistan Newspapers Society that issues facing the newspaper industry would be resolved, including the early payment of dues. Naqvi also discussed recent attacks on Jinnah House and the Mianwali Air Base, highlighting the pre-planned nature of these incidents, and emphasized the need to avoid wrongful arrests and propagate false propaganda related to women prisoners. [BR]

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INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

●?????Qatar-Bangladesh Sign 15-Year LNG Supply Deal: Qatar-Energy will sign a 15-year liquefied natural gas (LNG) supply agreement with Petrobangla, the state-owned gas company of Bangladesh, for the supply of 2 million tonnes annually. The deal is part of Qatar's North Field expansion project and signifies increased competition for LNG as Europe seeks alternatives to Russian pipeline gas amid the Ukraine conflict. [BR]

●?????Nvidia's Market Value Tops $1 Trillion: Chip company Nvidia reached a market value of over $1 trillion, driven by positive market sentiment and optimism about its role in artificial intelligence technology. Wall Street stocks mostly rose following an agreement between President Joe Biden and Republican House Speaker Kevin McCarthy to avoid a US debt default, with the Dow Jones Industrial Average slightly down, the S&P 500 up, and the Nasdaq Composite Index showing significant gains. [BR]

●?????Ukrainian Drones Strike Moscow: On Tuesday, Ukrainian drones targeted districts in Moscow, including areas where President Vladimir Putin and the elite have residences. President Putin described the drone strike as Kyiv's response to a Russian attack on a Ukrainian military intelligence headquarters. Russia's defense ministry claimed to have shot down or diverted eight drones, while sources suggested that more than 25 were involved, resulting in two injuries and brief evacuations in Moscow. [Dawn]

●?????UN Declares Cryosphere Priority: The United Nations' World Meteorological Organization (WMO) has declared the cryosphere, including the melting of sea ice, glaciers, and permafrost, as a top priority due to its global threat. Member states expressed concerns over the impacts on sea levels, ecosystems, natural disasters, and economies, calling for increased funding, coordinated observations, predictions, data exchange, research, and services related to the cryosphere. [Dawn]

●?????Oil Prices: Oil prices fell by about 4% on Tuesday on concerns about whether the U.S. Congress will pass the U.S. debt ceiling pact and as mixed messages from major producers clouded the supply outlook ahead of the OPEC+ meeting this weekend. Brent crude futures fell $3.09, or 4%, to $73.98 a barrel by 1503 GMT. U.S. West Texas Intermediate (WTI) crude was down $2.84, or 3.9%, from Friday's close, to $69.83 a barrel. [The News]

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PAKISTAN - REMAINDERS

●?????Bahrain's AAOIFI to work with Pakistan to develop a Shariah-compliant capital market. [The News]

●?????Opinion: The Bitter Truth About the Sugar Industry - The creation of novel disease-resistant sugar cane cultivars with excellent farm and factory yields requires ongoing study. Sadly, neither public nor private organizations have been successful in establishing any top-notch research facilities in the nation, which could eventually make sugarcane farming and sugar processing competitive on a global scale. The opportunities for the industry’s expansion through investment in technological advancement have also been overlooked as a result of price-fixing policies. The industry now has the status of a quasi rent-seeking enterprise where innovation has no place. As a result, the sector is now sensitive to global price movements. The industry has adopted anti-competitive practices because of concerns about cheap overseas prices. The chances for expanding and diversifying the sugar sector have remained challenging as a result of the aforementioned discussion. The entrepreneurial urge that develops and sustains an environment of fair competition through innovation has slowly evaporated. This has been replaced by a mindset of collusive practices that have led to further inefficiencies in the industry’s gleam, already one of the lowest amongst major sugar producing countries in the world in terms of technological efficiency.” - By Muhammad Sheroz Khan Lodhi [BR]