Wheat Import, PSO Recovery & Shell Profit, Cabinet Formation, IMF on Taxes & WB on KWSC, Israeli Genocide Ceasefire Talks, Farmers Protests in EU & In

TOPLINE

• Despite the Punjab government’s opposition, the federal government extended the deadline for private-sector milling wheat import until March 31, 2024.
• Pakistan State Oil (PSO) is proposing a levy of up to Rs 4/liter on Jet-A1 to recover outstanding receivables from PIA, amounting to Rs 21.7 billion as of January 31, 2024. Shell Pakistan Ltd (SPL) reported a profit of Rs 5.8 billion in 2023, compared to a loss of Rs 72 million in 2022, with sales rising to Rs 438 billion from Rs 418 billion.
• PM Shehbaz Sharif aims to tackle the crisis by finalizing his cabinet members' names within 48 hours. The KPK and Punjab cabinets were also sworn in yesterday. PTI claimed a ‘180-degree turn’ in ECP’s Form 45s for the Feb 8 elections.
• The IMF has recommended establishing a modern, semi-autonomous tax authority to collect federal and provincial taxes in Pakistan over the long term. The World Bank stressed that the KWSC should function independently of political influence to improve efficiency and financial sustainability.
• Ceasefire talks between Israel and Hamas stalled as Gaza's humanitarian crisis worsens as Israel plans to build 3,500 settler homes in the West Bank. Negotiators aim for a 40-day ceasefire before Ramadan.
• Angry farmers protested in Warsaw against EU regulation and cheap Ukraine imports, resulting in clashes with police. Dozens of Indian farmers, primarily from Punjab, were detained while traveling to New Delhi on Wednesday, prompting them to abandon their plan to demand higher crop prices.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Wheat Import Despite Punjab Opposition - The federal government extended the deadline for private sector milling wheat import until March 31, 2024, despite Punjab government opposition. This decision followed requests from industry associations and was discussed in a meeting at the Ministry of National Food Security, which also addressed wheat crop support prices for 2023-24 by Sindh and Balochistan governments. [BR]
• ZTBL, LIMS Digitize Agricultural Services for Farmers: ZTBL and LIMS have teamed up for digitizing agricultural services, empowering farmers with detailed land-related information. Through LIMS's portal and ZTBL's mobile credit officer, farmers gain access to climate data, crop monitoring, irrigation details, market access, and soil conditions. [BR]
• Textile Industry Alerts on Energy Impact on Exports: The textile industry has cautioned the Special Investment Facilitation Council (SIFC) about export declines due to the lack of a financially viable energy source. Proposed measures include enhancing competitiveness and removing cross-subsidies. Textile millers stressed the need for sustainable energy to sustain manufacturing and global competitiveness. [ET]
• Spices Export: Rs 2.68 billion was the export value of spices in Jan 2024, up 19.7% compared to Rs 2.24 billion in Jan 2023, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• NEPRA’s Discos Evaluation Post-Ramazan: NEPRA will evaluate the performance of power Distribution Companies (Discos) and the managing director of NTDC after Ramadan, focusing on issues like unrealistic monthly Fuel Charge Adjustments (FCAs) and industrial shutdowns. They also plan to assess each DISCO individually for any violations of regulations or licensing agreements based on data from July 2023 to March 2024. [BR] [ET]
• PSO Proposes Jet-A1 Levy to Recover PIA Dues: PSO is proposing a levy of up to Rs 4 per liter on Jet-A1 to recover outstanding receivables from PIA, amounting to Rs 21.7 billion as of January 31, 2024, with the Federal Cabinet approving PIACL's inclusion in the Active Privatization Programme on August 09, 2023. [BR]
• Pakistan Refineries Shift to Euro-V Standards: Refineries in Pakistan are adjusting operations to comply with Euro-V specifications, aiming to boost petrol and diesel production while reducing furnace oil output. The government, along with the refinery industry, is pushing for upgrades to decrease the country's reliance on imported petroleum products, which currently accounts for a significant portion of the total requirement. [Dawn]
• Shell Pakistan Reports Profit Surge, Sales Rise: Shell Pakistan Ltd (SPL) reported a profit of Rs 5.8 billion in 2023, compared to a loss of Rs 72 million in 2022, with sales rising to Rs 438 billion from Rs 418 billion. In October 2023, Shell Petroleum Company Ltd agreed to sell its 77.42% stake in SPL to Wafi Energy LLC, pending regulatory approvals. [Dawn]
• World Bank Urges Independent Operation for KWSC: The World Bank stressed that the Karachi Water and Sewerage Corporation (KWSC) should function independently of political influence to improve efficiency and financial sustainability. In a meeting with Chief Minister Syed Murad Ali Shah, a WB delegation discussed reforms for KWSC and irrigation system enhancements in the province. [Dawn] [ET]
• Pakistan Revises Gas Price Increase, Lowers Inflation Rate: The Pakistan Bureau of Statistics revised its previously reported increase in gas prices from 1108% to 480%, attributing the adjustment to a correction of calculation errors, leading to a lower overall inflation rate in February. Despite the significant downward revision, the new figure remains below the Ministry of Energy's claim of a maximum 150% increase, indicating discrepancies between official reports and government assertions. [ET]
• KKH Roads Partially Open, Quetta Heavy Rain - Northern Pakistan saw partial openings of major roads like the Karakoram Highway (KKH), while Quetta and parts of Balochistan experienced heavy rain. Travel remains difficult between Gilgit-Baltistan and other regions due to limited transport availability, despite KKH reopening after a five-day closure. [Dawn]
• Opinion: Minerals Economy - “For Pakistan to rise in the mining sector, an essential step involves determining which minerals hold the greatest value and potential. Once that has been done, the new government will need to design a comprehensive policy to cover the entire minerals value chain. This would include i) upstream — the exploration and extraction of minerals; ii) midstream — processing and refining; and iii) downstream — manufacturing the products for the end-user. Overlooking a single piece of this chain could derail the anticipated outcomes for the entire sector. The reliance on domestic capital is important for national prosperity; however, mining is an industry where initiatives to attract the interest of global investors are compulsory.” - By Umer Farooq [Dawn]

AGRI UPDATES & PAKISTAN POLICY

• Shehbaz Sharif Cabinet: PM Shehbaz Sharif aims to tackle the crisis by finalizing his cabinet members' names within 48 hours, according to PML-N leader Attaullah Tarar. Official confirmation is pending amidst reports of potential cabinet members being discussed, as Shehbaz concludes consultations. [The News]
• PTI Alleges Widespread Tampering in Election Forms: The PTI leadership alleged that Form-45s published by the Election Commission of Pakistan were heavily tampered with (a 180 degree turn), favoring PTI's rivals and showing voter turnout exceeding 100% at some polling stations. PTI Chairman Gohar Ali Khan expressed concern during a press conference, stating that such widespread rigging makes moving forward difficult. [Dawn]
• New Cabinets Sworn in Punjab & Khyber Pakhtunkhwa: New Punjab and Khyber Pakhtunkhwa cabinets were sworn in on Wednesday. Punjab Governor Balighur Rehman administered the oath to Chief Minister Maryam Nawaz Sharif's 18-member cabinet, including 2 female members. In Khyber Pakhtunkhwa, Governor Haji Ghulam Ali administered the oath to 15 ministers and 5 advisers. [Dawn]
• Caretaker Cabinet Plans Sukuk Issuance for Financing: The caretaker Federal Cabinet has decided to issue domestic and international Sukuk, along with other Shariah-compliant financing, against unencumbered government assets. The exact amount to be raised remains undisclosed, but the Finance Ministry has instructed relevant ministries to identify such assets following the Cabinet's approval. [BR]
• IMF Recommends Tax Authority Reform in Pakistan: The IMF has recommended establishing a modern, semi-autonomous tax authority to collect federal and provincial taxes in Pakistan over the long term, citing challenges in tax policy making and revenue administration due to the split in taxing rights between the federal government and provinces. [The News]
• Govt Doubles T-Bill Target, Eyes Rate Cut: The government exceeded its treasury bill auction target by over double, raising Rs 527 billion, as investors anticipate an interest rate cut with easing inflation. The State Bank of Pakistan received bids worth Rs 1.2 trillion, reflecting market expectations of a rate cut following a decrease in inflation to 23.1 percent in February, the lowest level in 20 months. [The News]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide: Ceasefire talks between Israel and Hamas stalled as Gaza's humanitarian crisis worsens as Israel plans to build 3,500 settler homes in the West Bank. Negotiators aim for a 40-day ceasefire before Ramadan, but Israel isn't directly involved. President Biden urged Palestinians to accept a ceasefire offer in exchange for releasing Israeli prisoners. [Dawn]
• Farmers Protest in Warsaw, Clashes with Police: Angry farmers protested in Warsaw against EU regulation and cheap Ukraine imports, resulting in clashes with police, injuring two officers and leading to a dozen protester detentions. Some tried to breach security railings onto parliament grounds, and tractor blockades were set up across the country. Police condemned violent behavior, including throwing cobblestones. [Dawn]
• Indian Farmers Detained enroute to Delhi: Dozens of Indian farmers, primarily from Punjab, were detained while traveling to New Delhi on Wednesday, prompting them to abandon their plan to demand higher crop prices in the capital. The farmers, part of the "Delhi Chalo" march initiated last month, were stopped by police about 200km north of Delhi. [Dawn]
• Egypt, IMF Boost Loan to $8 Billion Amid Currency Moves: Egypt and the IMF increased an initial $3 billion loan package to $8 billion after the central bank raised interest rates and floated the pound. The Egyptian pound hit a record low of around 50 pounds to the US dollar, ending over a year of a stable official exchange rate around 30.9 against the greenback. [BR]
• Iran Seizes American Cargo from Seized Oil Tanker: Iranian authorities have confiscated the American cargo of an oil tanker seized last year due to US-led sanctions. The Marshall Islands-flagged Advantage Sweet, chartered by Chevron Corp, was seized while carrying oil from Kuwait to Texas. A Tehran court ordered the seizure of the American oil cargo, valued at over $50 million. [BR]
• Powell: Fed Eyes Rate Cut, Warns on Inflation Progress - Fed Chair Jerome Powell stated that while the Federal Reserve expects to lower its benchmark interest rate later this year, he cautioned that continued progress on lowering inflation is not guaranteed. Powell emphasized the uncertain economic outlook and the importance of ongoing efforts to achieve the Fed's 2% inflation objective, especially in a charged presidential election year. [BR] [BBG] [BBG]
• Haley Withdraws, Trump Secures GOP Candidacy: Nikki Haley withdrew her challenge against Donald Trump, securing Trump's candidacy for the Republican Party in November against Democrat President Biden. Her announcement came after Trump's victory in 14/15 Republican nominating contests on Super Tuesday. [BR] [Dawn]
• OPEC+ Extends Production Cuts, Oil Prices Rise 2%: OPEC+ extend production cuts through Q2 2024, causing a 2% rise in oil prices. Led by Saudi Arabia and Russia, the decision aimed to balance the market against US crude production. Russia's cut remains unchanged since November 2023, with the cut's composition carrying importance. [BR]

PAKISTAN - REMAINDERS

• Jazz Partners with TenX for AI/ML Upgrade: Jazz has partnered with an international firm, TenX, to upgrade its Artificial Intelligence and Machine Learning (AI/ML) capabilities. This collaboration aims to streamline and process Jazz's AI/ML data, enabling the transformation of raw data into actionable insights for predictions. [Dawn]
• CM Maryam Nawaz Launches Ramadan Relief Package: The program eliminates queues by providing ration bags with QR codes, benefiting over 30 million people in Punjab. [ET]
• Sindh High Court Notices Ministry, PTA on not restoring Social Media Access. [Dawn]
• VPN Demands Surge: Proton reported significant demand surges in various regions over the past year: 4,700% in Nepal, 6,000% in Pakistan, 25,000% in Gabon, and 100,000% in Senegal, all attributed to political or civil unrest. [ET] [Samaa]
• Pakistan Secures $642 Million Deals in Q1 2023-24: In Q1 of fiscal year 2023-24, Pakistan signed $642 million in agreements, with $542 million from the World Bank (84%) and $100 million from the Islamic Development Bank (IsDB) (16%). [BR]
• Supreme Court Admits Unfair Trial in Bhutto Case: After over 44 years, the Supreme Court admitted that the murder trial of former Prime Minister Zulfikar Ali Bhutto was unfair and lacked due process. Chief Justice of Pakistan Qazi Faez Isa stated that the trial and appeal proceedings did not meet constitutional requirements for a fair trial and due process. [Dawn] [ET]
• Opinion: The Creditors’ View - “IN the days and weeks following the elections, the view held by Pakistan’s creditors seems to be clearing up. All the notes released on Pakistan since the elections point to the IMF as the single most important factor in the country’s short-term creditworthiness, and all of them revolve around the question of whether or not the incoming government will move clearly and decisively to secure another Fund arrangement. Most of them see political risks receding.” - By Khurram Husain [Dawn]