Cotton Arrivals, Power Tariff Raised, ECP Funding, Onion & Potato Price Rise, China & Indian Economic Outlook, COP28 on Fossil Fuels.

TOPLINE

• Cotton arrivals in Pakistan are rebounding from last year's floods, as data from the Pakistan Cotton Ginners Association (PCGA) indicates a 5.2% increase in arrivals to 7.753 million bales by November 30th.

• NEPRA has raised the tariff for power DISCOs by Rs 3/unit for October 2023 to recoup Rs 32 billion from consumers through the monthly Fuel Charges Adjustment (FCA) mechanism.

• The Finance Division has disbursed Rs 17.4 billion to the Election Commission of Pakistan for the 2024 general elections, adding to the Rs 10 billion released in July 2023.

• Premium onion prices in Karachi have risen to Rs 160-180/kg from Rs 120-140 in the past 2 weeks, attributed to extensive exports. New potato prices stand at Rs 120/kg, exceeding the Commissioner's set rate of Rs 109/kg.

• Ratings agency Moody’s downgraded the outlook on China’s credit rating to “negative” from “stable” on the back of rising debt. India will remain the fastest-growing major economy for at least the next three years, setting it on course to become the world’s third-largest economy by 2030, S&P Global Ratings stated.

• Battle lines on fossil fuels hardened at UN climate talks on Tuesday despite scientists warning that global warming could breach the 1.5C threshold within 7 years. The issue of phasing out fossil fuels was crucial to this discussion.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Cotton Arrivals Rebound by 5.2% in Nov - Cotton arrivals in Pakistan are rebounding from last year's floods, boosting the textile industry facing reduced demand and economic challenges. Data from the Pakistan Cotton Ginner’s Association indicates a 5.2% increase in arrivals to 7.753 million bales by November 30th. [The News]

• Soybean Oil Import: Rs 4.81 Billion was the import value of soybean oil in October 2023, down 35.8% YoY. [ET]

• Leather Footwear Export: Rs. 2.47 Billion was the export value of leather footwear in October 2023, up 13.93% YoY. [ET]

• Onion Prices Soar Amid Exports: Premium onion prices in Karachi have risen to Rs 160-180/kg from Rs 120-140 in the past 2 weeks, attributed to extensive exports. Consumers, facing inflation, are limiting purchases to less than one kg. New potato prices stand at Rs 120/kg, exceeding the Commissioner's set rate of Rs 109/kg. [Dawn]

• Chicken Meat Price Control: A crackdown is being carried out against retailers and wholesalers on the pretext of price control and profiteering. The sellers have approached the Sindh High Court to challenge the law. [Dawn]

• Potato Seed Collaboration: South Korea has decided to expand its joint program on certified seed potato production and will build aeroponic greenhouses to produce 160,000 tons of certified potato seeds annually in Pakistan. The Korea Programme on International Agriculture (KOPIA) and PARC signed technical cooperation projections for the construction of the greenhouses and the creation of the seeds. [Dawn]

AGRI-INPUTS, WEATHER, WATER & POWER

• NEPRA Raises Power Tariff by Rs 3 for October 2023: NEPRA has raised the tariff for power Distribution Companies (Discos) by Rs 3 per unit for October 2023 to recoup Rs 32 billion from consumers through the monthly Fuel Charges Adjustment (FCA) mechanism. The decision, made after scrutinizing data submitted by CPPA-G during a hearing on November 29, 2023, aims to recover costs associated with fuel charges. [BR] [Dawn]

• Anti-Electricity Theft Failure: Pakistan’s power sector circular debt stock crossed Rs 2.6 trillion by October end, showing a 13% or Rs 75.25 billion/month growth in its flow as the anti-theft and recovery drive failed to give results. [BR]

• Gas Price Hike: SNGPL Proposes Significant Increases - Sui Northern Gas Pipeline Limited (SNGPL) is seeking a 41% increase in the prescribed gas price, aiming to raise it to Rs 1,762.83 per mmbtu for the fiscal year 2023-24. Additionally, the company has requested a 137% hike to Rs 2,961.98 per mmbtu to recover previous years' shortfalls and Rs 293.07 per mmbtu for RLNG supply from July 2023. [BR]

• Shortage, Hike in Urea Price: Sindh Abadgar Board leader says Rs 1,500 per bag has been increased in one go, as fertilizer supplies into Sindh from Punjab are being blocked at border check-post. This may affect yields and in turn, food security, if farmers find it difficult to use the fertilizer altogether. [Dawn]

• LNG projects: Pakistan will embark on 2 new LNG projects, attracting $500 million in foreign investment. The China National Chemical Engineering Company (CNCEC) and LNGFlex Limited, a Bison Energy subsidiary based in UAE have formalized the contract for these initiatives in Pakistan. These projects will operate without government guarantees. [ET]

• Expansion Alert: GCIL to Establish ASU Plant in KP - Ghani Chemical Industries Limited (GCIL) is in the process of setting up Pakistan's largest Air Separation Unit (ASU) plant in Hattar Special Economic Zone, Khyber Pakhtunkhwa. [BR]

• Twin Cities Water Projects: 4 new sewage treatment plants will be installed at Rawal Dam with the cost of the installation of the plant being Rs 5.24 Billion while the Satellite Town upgrade will cost Rs 200 million. The federal and Punjab governments have agreed to jointly initiate projects. The total catchment area of Rawal Dam is 20 square kilometers. [ET]

AGRI UPDATES & PAKISTAN POLICY

• Rising Government Debt for 2023-24: The State Bank of Pakistan (SBP) has reported a rise of Rs 1.641 trillion in the federal government's total debt (domestic and external) stocks during the first 4 months of the fiscal year 2023-24. This represents a 2.7% increase, bringing the cumulative total debt stocks to Rs 62.482 trillion by the end of October 2023, compared to Rs 60.841 trillion at the end of June 2023. [BR]

• ECP Funding Boost: Rs 27.4 Billion Allocated by Finance Division - The Finance Division has disbursed Rs 17.4 billion to the Election Commission of Pakistan for the 2024 general elections, adding to the Rs 10 billion released in July 2023. The total funds allocated by the Finance Division to the ECP now stand at Rs 27.4 billion, with a commitment to provide additional funds as needed. [BR] [ET]

• SBP Launches Raast P2M Service for Digital Payments: The State Bank of Pakistan (SBP) has launched the Raast Person to Merchant (P2M) service as part of its implementation project, allowing businesses to accept digital payments through QR codes, Raast Alias, IBAN, and Request to Pay (RTP). Technical specifications have been shared with concerned Regulated Entities (REs) teams. [BR]

• Climate Byte with Amir Paracha: “In Pakistan, we are no longer facing the distant threat of climate change, but rather the harsh reality that demands immediate action. The World Bank estimates that an astounding $348 billion is required from 2023 to 2030 for adaptation, resilience and decarbonisation. This surpasses our traditional annual development budgets.” [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• COP28: Battle lines on fossil fuels hardened at UN climate talks on Tuesday despite scientists warning that global warming could breach the 1.5C threshold within 7 years. A new COP28 draft agreement in Dubai included the options of phasing out fossil fuels or not addressing the issue at all, setting the stage for tough negotiations due to end next week. Saudi Arabia took a hardline stance, saying it would “absolutely not” agree to phasing down fossil fuels. The thorny debate over the future of fossil fuels, the biggest cause of global warming, is the key battleground at the COP28 meeting hosted by the oil-rich United Arab Emirates. [BR] [BBC] [BBC] [Dawn]

• Israeli Genocide: Israeli forces stormed southern Gaza’s main city on Tuesday in what they called the most intense day of combat in five weeks of ground operations against Hamas militants, and hospitals struggled to cope with scores of Palestinian dead and wounded. Qatar’s ruler hit out at “shameful” international inaction over the Israel-Hamas war in Gaza as he opened a Gulf Cooperation Council meeting in Doha on Tuesday. Qatar was a key mediator in negotiations that resulted in a seven-day truce. Qatar’s ruler said his country was “constantly working to renew” the truce, but added this was “not an alternative to a permanent ceasefire”. [BR] [BR] [Dawn]

• Indian Economic Growth: India will remain the fastest-growing major economy for at least the next three years, setting it on course to become the world’s third-largest economy by 2030, S&P Global Ratings said in a report. S&P expects India, currently the world’s fifth-largest economy, to grow at 6.4% this fiscal and estimates growth will pick up to 7% by fiscal 2027. In contrast, it expects China’s growth to slow to 4.6% by 2026 from an estimated 5.4% this year. [BR] [Reuters]

• China Credit Rating: Ratings agency Moody’s downgraded the outlook on China’s credit rating to “negative” from “stable” on the back of rising debt. China’s post-pandemic recovery has been hampered by weak consumer and business confidence, a persistent housing crisis, record youth unemployment and a global slowdown. Those woes have piled pressure on governments to step in with more financial support following a one trillion yuan ($137 billion) sovereign bond issuance in October. [BR] [Reuters] [Bloomberg]

• Indonesia Rice Harvest: Indonesia is targeting ten million metric tons of rice output during peak harvest in March to April next year. Rice harvested in March is projected at around 5.56 million tons, with harvest in April seen at 4.51 million tons, the ministry said in a statement. Rice is a staple for most of Indonesia’s 270 million people and price movement is politically sensitive, especially with elections due in February.  The ministry plans to plant rice on 10.54 million hectare areas, with output expected to reach 32 million tons in 2024. [BR] [Nasdaq]

• EU Ban on Destruction of Unsold Clothing: The European Parliament and EU member states announced on Tuesday new rules to crack down on fast fashion and reduce waste, including a ban on destroying unsold clothes. The new rules, first proposed by the European Commission last year, impose tougher rules on products to ensure they last longer and are easier to repair and recycle. The law bans the destruction of unsold textiles and footwear, and will apply two years after the law enters into force. Medium-size companies will have a six-year exemption, while smaller companies are wholly exempt from the ban. [BR] [DW] [Reuters]

• Natural Disasters: The Indonesian volcanic eruption has left 22 people dead as 75 climbers were on the volcano when it erupted on Sunday. Separately, flooding after a cyclone in Chennai, India has killed 13 people as more than 390,000 people felt its impact in Andhra Pradesh and Chennai. [ET]

PAKISTAN - REMAINDERS

• Green Turtles Fight to Survive: 6 conservationists tasked with protecting the last surviving turtle species to nest in the country stand guard at Sandspit Beach, Karachi to ensure that the turtles are taken care of during the nesting season. [Dawn]

• CASI Welcomes HBL: A Step Towards Green Finance Advocacy - HBL (Habib Bank Limited) announced on Tuesday its participation in the Capacity Building Alliance of Sustainable Investment (CASI), an international platform to promote green finance in developing countries. [The News]

• FBR Accesses Economic Transaction Information Through SBP-Licensed Gateways: The remittance gateways licensed by the State Bank of Pakistan (SBP) are among the financial institutions to provide real-time access to information and databases relating to economic transactions to the Federal Board of Revenue (FBR). [BR]

• DRAP Approves Life-Saving Drugs: The Drug Regulatory Authority of Pakistan (DRAP) has approved the registration of critical life saving drugs from multiple pharmaceutical firms to address shortages in response to the Caretaker Federal Minister for National Health Services and Regulations, Dr. Nadeem Jan's directives issued a few weeks ago, which were prompted by reports of shortages of essential medicines in the local market. [BR]