Tag: import

  • PM orders inquiry on wheat import last year

    PM orders inquiry on wheat import last year

    Prime Minister Shehbaz Sharif has ordered an inquiry committee to investigate the import of wheat last year under caretaker setup despite abundant harvest.

    Shehbaz appointed Secretary Cabinet Division Kamran Ali Afzal as head of the probe body.

    “What led to the import of wheat despite abundant production,” the prime minister inquired.

    Farmers in Punjab have staged protests because the government is not buying wheat crops from them at the agreed-upon rates.

    “All necessary measures should be taken for buying wheat and farmers should be compensated for their hard work soon,” Shehbaz assured.

    Importantly, Shehbaz has removed Federal Secretary National Food Security and Research Division Captain (R) Muhammad Asif from his post on the issue of wheat import during the caretaker government.

    Asif is a Grade 21 officer of the Pakistan Administrative Service. He has been made OSD.

  • Significant increase in mobile phone imports in eight months

    Significant increase in mobile phone imports in eight months

    Imports of mobile phones have recorded a significant year-on-year increase in the first eight months of the current financial year.

    According to statistics released by Pakistan Bureau of Statistics, during the period from July to February 2024, 1.148 billion dollars was spent on the imports of mobile phones, which is 156 per cent more than the 448 million dollars of the same period of the previous financial year.

    According to the data, 161 million dollars was spent on the imports of mobile phones in February, which is 387 per cent more than February of last year.

    Compared to January, there was a decrease of eight per cent in imports of mobile phones in February on a monthly basis — 195 million dollars were spent on the imports of mobile phones in January.

  • Massive reduction in petrol price expected as Pakistan aims for one-third crude oil import from Russia

    Massive reduction in petrol price expected as Pakistan aims for one-third crude oil import from Russia

    Minister of State for Petroleum, Musadik Malik, has announced that the prices of petroleum products will witness a decrease once a continuous supply of oil from Russia is ensured.

    Speaking to a private news channel, Malik highlighted the substantial difference in prices that will benefit the masses once Pakistan starts fulfilling one-third of its domestic oil needs through imported Russian oil. He stated, “Our target is to obtain one-third of crude oil from Russia at a discounted rate. When we achieve this objective, petroleum products will be available at a cheaper price.”

    In response to a question about the expected decrease in fuel prices, Malik said, “I am unable to divulge the precise pricing details at this moment. However, it will lead to a significant difference.”

    While the state minister refrained from disclosing the current price, he emphasised that a substantial reduction in price would occur. He also mentioned that the first oil cargo has already arrived in Karachi, and the government is focused on maintaining a steady supply of Russian oil.

    The current deal involves 100,000 metric tonnes of oil, with the second consignment scheduled to arrive at the port next week.

    When asked about the possible effects of buying Russian oil and any potential issues at the global level, Malik expressed confidence that adhering to agreements and maintaining transparency would prevent any complications. He underscored the importance of responsible international engagement.

    Previously, Prime Minister Shehbaz Sharif expressed his fulfillment of another promise made to the nation, stating that the arrival of the first-ever Russian oil cargo marks the beginning of a new relationship between Pakistan and the Russian Federation. He described the day as transformative and emphasised the country’s commitment to achieving prosperity, economic growth, and energy security.

    Following its docking at the port, the authorities have commenced the process of transferring the Russian crude from the oil tanker to the Pakistan Refinery Limited for further processing and extraction of various final products. The transportation of crude oil to the facility is expected to be completed within the next 24 to 36 hours.

    It is worth noting that this is the first time Russian crude oil is being treated in Pakistan. The determination of the actual price of petroleum products in Pakistan will be possible only after the completion of the processing of this imported oil.

  • Pakistan places first order for discounted Russian crude oil

    Pakistan places first order for discounted Russian crude oil

    Pakistan has placed its first order for discounted Russian crude oil under a new deal negotiated between Pakistan and Russia, following months of discussions.

    State Minister for Petroleum, Musadik Malik, confirmed that one cargo will dock at Karachi port in May.

    Pakistan will only purchase crude oil, not refined oil, and imports are expected to reach 100,000 barrels per day if the initial transaction goes smoothly. Pakistan’s Refinery Limited (PRL) will initially refine the Russian crude, with other refineries to be included after a trial run.

    A delegation from Russia arrived in Pakistan earlier this month to discuss the payment mode. During these talks, the Russian side requested that the deal with Moscow be kept secret as they do not want the disclosure to other Russian crude buyer countries.

    Consequently, Pakistan’s top officials decided not to disclose the mode of payment and the exact discount. Russian Energy Minister Nikolay Shulginov led a delegation to Islamabad in January to hold talks on the deal, after which he said oil exports to Pakistan could begin after March.

  • Cotton production in Pakistan drops to 40-year low due to flood damage

    Cotton production in Pakistan drops to 40-year low due to flood damage

    According to data released by the Pakistan Cotton Ginners Association (PCGA), cotton production in the country has decreased by 34 per cent this year compared to the previous season. The final figures for the crop year 2022-23 show that Pakistan produced 4,912,069 bales, which is the lowest in around four decades, as opposed to 7,441,833 bales produced in the 2021-22 season, resulting in a year-on-year decline of 2,528,764 bales or a 34 per cent loss.

    This drop in production means that the textile industry will have to import around 10 million bales to meet its annual demand of 15 million bales. However, mill consumption in the year 2022-23 has also been reported at 8.8 million bales, the lowest in over 20 years, primarily due to severe import financing issues.

    Market sources state that textile mills have so far signed import agreements for 5.5 million bales, while they have purchased 4,605,449 bales from the local market. Last year, the mills had bought 7,332,000 bales from the domestic market. Ginners report that they are still holding 301,720 bales in their stocks, compared to last year’s inventory of 93,833 bales.

    The massive drop in cotton arrival is blamed on flash floods and heavy rains during last year’s monsoon that devastated large swathes of agricultural land in the country, particularly in Sindh and Balochistan provinces.

    Interestingly, despite strong demand in international markets, only 4,900 bales of white lint were exported this year, compared to the previous year’s figure of 11,000 bales, a fall of over 69 per cent. The main destinations for Pakistan’s raw cotton are the Philippines, Italy, Bangladesh, Greece, and France.

    Province-wise, Punjab registered over a 32 per cent year-on-year decline in output, producing 3,033,050 bales this season against 3,928,690 bales last season. Sindh reported over a 46 per cent year-on-year loss in yield, with the lint production in the province this year standing at 1,879,019 bales against 3,513,143 bales last year.

    Pakistan’s cotton output reached a high of 14.1 million bales in the year 2004-05. But it dropped to 7 million bales in 2020-21 and about 9.45 million bales in 2021-22, as the country’s per acre yield contracted to half of the crop productivity in other countries of the region.

    A recent meeting of the Economic Coordination Committee (ECC) expressed concern over the continuous decline in cotton production and acreage over the years. As a result, the ECC approved Rs8,500 per 40kg as the intervention price on a summary submitted by the Ministry of National Food Security and Research to attract growers towards the crop.

    The ministry informed the ECC that in order to draw up a cotton intervention price proposal, consultations were held with all stakeholders, including the provincial governments, growers, and cotton associations in January and February. Stakeholders, including the All Pakistan Textile Mills Association, called for pegging the cotton intervention price with the import parity price in line with the policy adopted over the past two years.

    To review market prices and propose intervention on a fortnightly basis, the ECC constituted a cotton price review committee with the mandate to review market prices and propose intervention on a fortnightly basis.

  • Pakistan’s Petroleum Division eyes discounted Russian crude oil amid high global prices

    Pakistan’s Petroleum Division eyes discounted Russian crude oil amid high global prices

    Petroleum Division is attempting to purchase Russian crude oil for approximately $50/barrel, which is at least $10/barrel below the price ceiling imposed by G7 countries on this valuable commodity originating from Russia because of its conflict with Ukraine. Presently, crude oil is being sold internationally for $82.78/barrel.

    Officials participating in the virtual negotiations with Russia have disclosed that Moscow is primarily focused on fulfilling all prerequisites, such as deciding on the method of payment, shipping costs with premium, and insurance expenses, before entering into an agreement with Pakistan. These officials, who requested anonymity, revealed that Russia will respond regarding the discount on the base price after the prerequisites are finalized. They also stated that shipping the crude oil from Russian ports will take 30 days, resulting in a $10-15/barrel increase due to transportation costs.

    The talks between Moscow and Islamabad are progressing positively, with the expectation that a government-to-government deal on Russian crude oil imports will be finalized by the end of March. When asked, officials stated that the government has decided not to disclose the payment method to Russia for crude oil imports, but authorities are considering using Pakistan National Shipping Corporation (PNSC) ships or Russian tankers for transportation.

    An official cautioned that the landed cost of Russian crude must be considered because the crude vessel will arrive in 30 days, leading to a per barrel shipping cost of $10-15. They added that Moscow has not agreed on the discount yet, and the maximum discount may be offset by the crude oil’s shipping costs.

    State Minister Musadik Malik had previously claimed that Pakistan would receive a 30% discount on Russian crude oil during a press conference. The government plans to import one Russian crude oil ship to test the landed cost compared to the existing cost of crude being imported from Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates and Saudi Aramco.

    According to Geo, the Petroleum Division secretary is currently in Karachi to further discuss the import of Russian crude oil to process it for finished products with the top management of Pak-Arab Refinery Company Limited (PARCO), Pakistan State Oil (PSO), Pakistan Refinery Limited (PRL), and other refineries. If the test ship’s cost is low enough to bring down the prices of petroleum, oil, and lubricants, Pakistan will approve Russian oil cargos within a month.

    Due to a US dollar liquidity crunch, Pakistan will pay Russia in the currencies of friendly countries such as China, Saudi Arabia, and the UAE. The officials revealed that the ship carrying Russian crude will be insured by the National Insurance Company Limited (NICL) and Pakistan Reinsurance Company Limited (PakRE). The State Bank of Pakistan (SBP), which was previously hesitant about transactions with Russian banks due to G7 restrictions, has now expressed a willingness to communicate with the Russian counterpart bank regarding a payment mechanism for oil imports in three currencies other than dollars.

  • Pakistan’s oil industry on the brink of collapse, calls for urgent government intervention

    Pakistan’s oil industry on the brink of collapse, calls for urgent government intervention

    According to recent reports, the oil industry in the country is facing serious challenges in obtaining crude oil and petroleum products due to foreign exchange constraints and current product pricing. These challenges have been exacerbated by the recent depreciation of the currency and an increase in the central bank’s policy rate.

    The Oil Companies Advisory Council (OCAC), which comprises over three dozen major oil marketing companies (OMCs) and refineries, has expressed concern to the government about the possibility of a major disruption to the already fragile supply chain.

    In a communication to the ministers for finance and energy, the governor of the State Bank of Pakistan (SBP), and the chairman of the Oil and Gas Regulatory Authority (Ogra), the OCAC has urged for urgent engagement to address the “severe impact of the recent depreciation of the rupee.”

    The association has also requested the development and immediate implementation of a transparent mechanism for the recovery of foreign exchange losses in product pricing. If immediate revision of prices based on the current exchange rate is not feasible, the government should at least put a system in place immediately.

    The recent steep depreciation has rendered the existing letter of credit (LC) lines inadequate for the industry, which could lead to import disruption of crude and refined products. The industry has also expressed concern about the cost of opening confirmed LCs, which has gone up many times and adversely impacted profitability.

    Moreover, maintaining the 20 days’ mandatory stock cover as per OMCs license requirement at the current rupee-dollar parity and after the recent increase in the SBP policy rates has resulted in borrowing costs of more than 50 per cent of regulated margins. Additional working capital burdens can raise significant concerns around OMCs’ ability to sustain operations.

    The association has reported that its members have been doubly hit due to the erosion of equity from foreign exchange losses and a reduction in working capital lines due to an increase in the rupee-dollar parity coupled with a rise in international oil prices, particularly high-speed diesel. The OMCs have already reported about Rs35 billion cumulative losses in POL pricing in recent months.

    The international price of petrol has increased by 3 per cent ($2.8 per barrel) to $94.84 per barrel between Jan 1, 2022, and March 2, while HSD prices surged by $15.48 or 18 per cent to $103.53 per barrel. During the same period, the rupee depreciated by over 61 per cent or Rs108.38 against the US dollar. This means that oil prices and exchange rate changes require an increase in the oil industry’s needs by 90 per cent than LC limits in local currency compared with last year to produce the same quantity of HSD.

    Therefore, the oil industry has called upon the government to ensure that the banking sector enhances limits for oil companies and refineries, enabling them to manage the impact of increased oil prices and rupee depreciation that are critical for the survival of the sector and the integrity of the POL supply chain.

    According to Dawn, the OCAC has warned that the industry is on the brink of collapse, as fuel shortages in certain areas earlier this year highlight the fragile condition of the industry. Urgent government intervention is necessary to ensure uninterrupted supplies.

  • SBP-held foreign exchange reserves drop to a highly critical level of $2.92 billion

    SBP-held foreign exchange reserves drop to a highly critical level of $2.92 billion

    The State Bank of Pakistan (SBP) has reported a decrease in its foreign exchange reserves, as reflected in data released on Thursday. The reserves fell to a total of $2.92 billion, marking a reduction of $170 million.

    According to the recent data, the current level of reserves held by the bank has reached its lowest point since February 2014.

    The country’s total liquid foreign reserves were reported to be at $8.54 billion, according to the latest data. Meanwhile, commercial banks in the country held net foreign reserves of $5.62 billion.

    “During the week ended on February 3, 2023, SBP’s reserves decreased by $170 million to $2,916.7 million due to external debt repayments,” the SBP said in a statement.

    The State Bank of Pakistan (SBP) experienced a substantial decrease in its foreign exchange reserves last week, declining to $3.09 billion, a drop of $592 million. This represents the lowest level of reserves for the central bank since February 2014. The current level of reserves falls below one month’s worth of import coverage.

    The depletion of the central bank’s reserves, which stood at nearly $18 billion at the beginning of 2022, highlights the pressing need for Pakistan to move forward with the next review of its International Monetary Fund (IMF) program.

    These declining reserves serve as a reminder of the economic challenges facing the country and the importance of addressing them in a timely and effective manner.

  • SBP asks banks to prioritise import of certain essential items to help businesses

    SBP asks banks to prioritise import of certain essential items to help businesses

    In order to help businesses, the State Bank of Pakistan (SBP) on Monday removed the necessity for prior import approval and asked banks to give priority to the importation of certain necessities, including food, medicine, and energy.

    The business community, including various trade bodies and chambers of commerce, has drawn attention to the fact that many shipping containers carrying imported goods are stuck at the ports as a result of delays in the release of shipping documents by banks, according to a statement issued by the SBP on Monday.

    “SBP has advised banks to provide one-time facilitation to all those importers who could either extend their payment terms to 180 days (or beyond) or arrange funds from abroad to settle their pending import payments.”

     “Accordingly, till March 31, 2023, banks have been advised to process and release documents of shipments/ goods that have already arrived at a port in Pakistan or have been shipped on or before January 18, 2023,” said the central bank.

    To avoid any future issues, SBP also suggests that clients notify their banks before beginning any import transaction.

    To the dismay of many importers and firms in Pakistan, who cited these constraints as the reason for closing down or curtailing operations, the SBP restricted imports early this year due to low levels of foreign exchange reserves.

    Last week, the business community of the country harshly criticised the SBP’s role in the issue in light of the difficulty in issuing letters of credit.

  • Pakistan will start importing crude oil from Russia in March

    Pakistan will start importing crude oil from Russia in March

    Pakistan and Russia have decided on the deadline for crude oil exports in late March after the conclusion of the annual inter-governmental commission between the two countries concluded.

    The Minister of State for Petroleum, Musadik Malik, said that Pakistan intends to import 35 per cent of its entire crude oil needs from Russia. He added that Russia does not have liquefied natural gas (LNG) for Pakistan currently.

    Russian Energy Minister Nikolay Shulginov also stated that Pakistan will pay for its energy purchases from Russia in the currencies of friendly nations when they begin in late March.

    Last year, the government of Pakistan sent representatives to Russia, and as a result, the state minister for petroleum of Pakistan announced that Russia would supply crude oil at a reduced price.

    Russian oil and gas have not historically been widely imported by Pakistan.

    Islamabad and Moscow agreed during the negotiations that the oil and gas trading transaction will be set up such that both nations can profit economically after reaching an agreement on the technical details.

    The leaders also decided to expand energy infrastructure investment, improve energy trade, and strengthen energy cooperation under advantageous strategic and commercial circumstances.

    A “Comprehensive Plan for Energy Cooperation” that will serve as the framework for future work and be completed in 2023 has been agreed to by both parties.

    The federal and provincial governments of Pakistan welcomed the Russian side to consider prospective initiatives, including those involving public-private partnerships and asked the Russian businesses to investigate these options.

    “Both sides have resolved the pending issues related to the exchange of information on certificates of origin of goods with the use of an electronic verification system and shall endeavour to finalise the above-mentioned protocols by the end of May 2023,” the joint statement issued in this regard read.

    In order to improve their mutual collaboration and talk about issues pertaining to connectivity and logistics in Central and South Asia, the authorities decided to designate focus points for each side.

    It was also resolved at the talks held over the last three days that creative business practises, such as bartering, would be used. They also agreed to further investigate the possibility.

    “In the context of the desire of both parties to promote regional integration and Eurasian connectivity, the two sides agreed to share information towards developing and improving rail and road infrastructure,” the statement read.

    The documents signed during the session included an “Agreement regarding cooperation and mutual assistance in customs matters,” a “Protocol on the Exchange of Documents and Data on the Customs Value of Goods Transported,”  and a “Working Agreement on the Airworthiness of Aeronautical Products.”

    The seventh IGC’s debates and choices served as the foundation for the eighth session, which moved the process ahead and looked at new possibilities for collaboration.

    Additionally, Pakistan and Russia decided to extend their cooperation in the areas of commerce and investment, energy, communication, transportation, higher education, industry, railroads, banking, finance, customs, agriculture, science, and technology.