Drought Warning, Banking ADR rise, NEPRA Report & Upgrades, Crude Imports, Bonds & Treasury, US-China Talks.

TOPLINE

• The Pakistan Meteorological Department issued a drought warning for several southern regions, including Sindh and parts of Balochistan, due to significantly below-average rainfall from September to November 2024.
• The banking sector's Advance-to-Deposit Ratio (ADR) rose to 47.8% as of November 29, 2024, up from 44.3% in October and 38.4% in August. This increase of 944 basis points reflects banks' efforts to meet the mandatory 50% ADR threshold by December 31, 2024.
• NEPRA’s FY24 Performance Evaluation Report reveals a concerning trend for Pakistan's power distribution companies (DISCOs), with nearly every performance metric worsening, including transmission and distribution (T&D) losses and lower billing recovery ratios. Nepra has directed NTDC and KE to implement real-time transformer load monitoring systems to manage loads and reduce outages.
• Rs 85 billion was the value of petroleum crude imported in Oct 2024, down 43.8% compared to imports of Rs 151.3 billion last year.
• The State Bank of Pakistan (SBP) raised Rs 788.14 billion in a floating rate Pakistan Investment Bonds auction, surpassing its Rs 700 billion target, with yields of 14.77% for 5-year and 14.27% for 10-year bonds. In a separate Market Treasury Bills auction, SBP raised Rs 1.26 trillion, exceeding its Rs 1.2 trillion target.
• US officials from President Joe Biden's outgoing administration are scheduled to meet Chinese counterparts for economic talks, aiming to strengthen relations ahead of Donald Trump's potential return to the White House. Trump has invited Xi for his inauguration as well.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Daily Rates: Find the following rates on the hyperlinked titles: [Shipping Intelligence], [Pakistan Stock Exchange], [Kibor International Kibor Rates], [BRIndex100 & BR Sectoral Indices], [Activities of Karachi Port Trust, Port Qasim]
• Traders Urge CM Action Against Extortion: Livestock traders have urged the Sindh Chief Minister to take action against a government contractor allegedly extorting money from them under the pretext of a market fee at the city's entry points. The traders assert that this practice violates the Market Act, 1939, and Sindh High Court orders, and request the chief minister's intervention as he had previously halted the illegal fee collection. [Dawn]
• SAU Launches Climate Resilience Campaign: Sindh Agriculture University (SAU), Tandojam, launched a climate resilience campaign in collaboration with FAO to promote sustainable agriculture. The campaign, part of the "Transforming Indus Basin with Climate Resilient Agriculture and Water Management" project, engaged over 2,000 farmers in Umerkot, Sanghar, and Badin through roadshows and a play. [Dawn]
• Gold Prices Rise for Third Day: Gold prices continued to rise for the third consecutive day on Wednesday, reaching Rs 280,500/tola with an increase of Rs 3,100, which came in line with the global trend. The price of 10-gram gold hit Rs 240,484, up Rs 2,658, reported the All Pakistan Sarafa Gems and Jewellers Association. Internationally, bullion prices saw an uptick of $31-$2,693/ounce, it said. [ET]
• Cotton & Phutti Price Range in Pakistan: Cotton rates across Pakistan range from Rs 16,000-Rs 17,800/maund in Sindh, Rs 16,500-Rs 17,700/maund in Punjab, and Rs 16,500-Rs 17,300/maund in Balochistan. Phutti prices range from Rs 6,500-Rs 7,600/40 kg in Sindh, Rs 7,500-Rs 8,800 in Punjab, and Rs 7,400-Rs 9,200 in Balochistan, with Balochi Cotton and Primark cotton priced at Rs 18,500-Rs 18,900/maund. [BR]
• Habib Sugar Mills Reports Rs 1.96 Billion Profit: Rs 1.96 billion was the profit reported by Habib Sugar Mills for the year ended Sept 30, 2024, down 23% from Rs 2.54 billion last year. [ET]
• Opinion: Economic Repercussions of Reliance on Cotton Imports - “The future of Pakistan’s economy, agriculture, and textile industry hinges on stabilizing cotton production. The current crisis demands an urgent and decisive action to address declining production, support farmers, and strengthen the textile industry. If immediate steps are not taken, the repercussions could be catastrophic for the national economy.” - By Sajid Mahmood [BR]

ENERGY - WEATHER, WATER & POWER

• PMD Issues Drought Warning for Southern Regions: The Pakistan Meteorological Department issued a drought warning for several southern regions, including Sindh and parts of Balochistan, due to significantly below-average rainfall from September to November 2024. Affected areas include Mohenjodaro, Larkana, Sukkur, Ghotki, and several others in Sindh, as well as Nokundi and Dalbandin in Balochistan, with mild to moderate drought conditions also observed in parts of Punjab and the Potohar region. [BR]
• Petroleum Imports Drop 43.8% in October: Rs 85 billion was the value of petroleum crude imported in Oct 2024, down 43.8% compared to imports of Rs 151.3 billion last year, according to the PBS. [ET]
• NEPRA Orders Load Monitoring: Nepra has directed NTDC and KE to implement real-time transformer load monitoring systems to manage loads and reduce outages. Persistent constraints in NTDC’s transmission system are causing underutilization of cost-effective power plants, forcing reliance on expensive alternatives, which worsens financial and system reliability issues. [BR]
• NEPRA Approves Tariff Adjustment: NEPRA has approved a positive adjustment of Rs 0.1957/kWh under the QTA mechanism, allowing Discos and KE to recover Rs 1.187 billion from consumers (excluding lifeline and prepaid users) in December 2024. This adjustment applies uniformly to all consumer categories for the first quarter of FY 2024-25. [BR]
• NEPRA Reports DISCOs' Worsening Performance: NEPRA’s FY24 Performance Evaluation Report reveals a concerning trend for Pakistan's power distribution companies (DISCOs), with nearly every performance metric worsening, including transmission and distribution (T&D) losses and lower billing recovery ratios. Despite higher consumer tariffs, T&D targets and bill collections have continued to falter, leading to a record Rs 662 billion financial loss, nearly three times higher than five years ago. [BR]
• KE Advances Solar Projects: K-Electric is advancing its renewable energy goals with the 150 MW Winder (50 MW) and Bela (100 MW) solar projects, receiving record-low bids of Rs 11.65 and Rs 11.20/unit, respectively, from Master Textile Mills Ltd. Praised during a Nepra hearing, KE's efforts to integrate renewables into its energy mix showcase a forward-thinking approach and enhance Pakistan's standing in global renewable energy bidding. [ET]
• SSGC Disconnects Illegal Gas Connections Amid Rising Prices: SSGC disconnected 4,964 illegal gas connections, including 4,771 in Karachi, as part of efforts to curb theft amid declining gas reserves. The government also acknowledged that the 840% rise in gas prices, 110% increase in electricity tariffs, and 43% currency depreciation under the IMF program have contributed to unprecedented inflation in Pakistan. [BR] [Dawn]
• OGDCL Secures Miran Block: Oil and Gas Development Company Limited (OGDCL), leading a consortium with PPL and GHPL, has secured a 29% working interest and operatorship in the Miran Block in KP's North Waziristan and Kurram Districts. This aligns with OGDCL's strategy to boost exploration and expand hydrocarbon reserves. [MG]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Banking Sector ADR Rises to 47.8%: The banking sector's Advance-to-Deposit Ratio (ADR) rose to 47.8% as of November 29, 2024, up from 44.3% in October and 38.4% in August. This increase of 944 basis points reflects banks' efforts to meet the mandatory 50% ADR threshold by December 31, 2024, with penalties in the form of additional taxes if the target is not met. [ET]
• Pakistan, ADB Strengthen Cooperation: The Asian Development Bank (ADB) has approved $530 million in loans for Pakistan, with $330 million to strengthen social protection programs and $200 million to modernize power distribution infrastructure.Minister for Economic Affairs Ahad Cheema and ADB Country Director Xiaoqin (Emma) Fan reaffirmed cooperation, with Cheema praising ADB’s support for tax reforms, the power sector, and the $500 million CDREP program. Meanwhile, ADB revised Pakistan's growth forecast to 3% and inflation to 10%, attributing it to industrial recovery, though weak agriculture and a missed 3.6% target underscore persistent economic challenges. [BR] [ET] [BR] [BR]
• PTI Chairman Calls for Reconciliation & Accountability: PTI chairman Gohar Ali Khan called for reconciliation, urging the government to apologize and compensate party supporters allegedly killed during the Nov 26 protest at Islamabad's D-Chowk. While he demanded accountability for the deaths of 12 PTI protesters, Federal Minister Attaullah Tarar denied reports of a breakthrough with PTI, clarifying that no formal talks had occurred despite a meeting between National Assembly Speaker Ayaz Sadiq and PTI leaders. [Dawn] [ET] [ET] [The News]
• Pakistan’s CAD Declines 79%: Minister for Finance Muhammad Aurangzeb announced a 79% decline in Pakistan's Current Account Deficit (CAD), dropping to $217 million in the first two months of FY 2025, mainly due to strong remittances and stable exports. He also projected exports to reach $33 billion in FY 2025, with IT exports increasing from $3.2 billion to $4.2 billion. [BR]
• SBP Raises Rs 2.05 Trillion in Bond Auctions: The State Bank of Pakistan (SBP) raised Rs 788.14 billion in a floating rate Pakistan Investment Bonds auction, surpassing its Rs 700 billion target, with yields of 14.77% for 5-year and 14.27% for 10-year bonds. In a separate Market Treasury Bills auction, SBP raised Rs 1.26 trillion, exceeding its Rs 1.2 trillion target, with cut-off yields of 11.9999% for 3-month, 11.9999% for 6-month, and 12.2999% for 12-month bills. Total bids amounted to Rs 1.93 trillion, with Rs 163.23 billion accepted from non-competitive bids. [Dawn] [MG] [MG]
• Bosal Criticizes NFC Award: Federal Finance Secretary Imdad Ullah Bosal criticized the current National Finance Commission Award for distorting Pakistan's fiscal position, leading to higher interest rates on foreign loans, including a nearly 5% rate on the new IMF loan. He emphasized that the federal fiscal structure, altered after the 7th NFC, should be revisited, as the country is unable to access international capital markets due to low credit ratings. [ET]
• KSE 100 Hits Historic High: The equities market rebounded on Wednesday, with the KSE 100 index hitting a historic high of 110,810, driven by hopes of a rate cut. The rally, supported by strong local institutional buying, saw the index reach an intraday peak of 111,012, fueled by speculations of a significant policy easing by the State Bank of Pakistan following a recent cut in national savings rates. [Dawn]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israeli Genocide: Israeli airstrikes across the Gaza Strip killed at least 38 Palestinians on Wednesday, with the deadliest attack targeting a house in Beit Lahiya, where at least 22 people, including women and children, were killed. The multi-storey building, home to over 30 people, was struck, and several family members remained missing as rescue efforts continued. [Dawn]
• Syria Transition: Germany's Foreign Minister Annalena Baerbock urged Israel and Turkey to avoid hindering Syria's peaceful transition following the ousting of President Bashar al-Assad in an Islamist-led rebel offensive, emphasizing the importance of internal dialogue. The collapse of Assad's government has damaged Russia's global image, highlighting the constraints of its military capabilities as it focuses on the Ukraine conflict, with rebels swiftly toppling the regime and Assad reportedly seeking asylum in Moscow. [BR] [BR]
• Haqqani Killed in Kabul Bombing: Khalilur Rehman Haqqani, the Afghan Taliban's acting minister for refugees, was killed in a suicide bombing near his office in Kabul. The attack resulted in the deaths of at least six others and occurred outside a mosque near his office. Haqqani was the brother of Jalaluddin Haqqani, founder of the Haqqani Network, and the uncle of Sirajuddin Haqqani, the current acting interior minister. [Dawn] [ET]
• US-China Economic Talks Amid Tensions: US officials from President Joe Biden's outgoing administration are scheduled to meet Chinese counterparts for economic talks, aiming to strengthen relations ahead of Donald Trump's potential return to the White House. Economic tensions between the two nations have intensified under Biden, and may escalate further if Trump implements planned tariff hikes, particularly over concerns about illegal fentanyl imports. [BR]
• Oil Prices Rise Over 1% Amid Sanctions: Oil prices increased over 1% on Wednesday, driven by the European Union's new sanctions threatening Russian oil flows. Brent crude rose by 1.22% to $73.07 per barrel, while US West Texas Intermediate crude climbed 1.59% to $69.68, though gains were limited by a larger-than-expected increase in US fuel stockpiles. [BR] [Dawn]

OPINION(S) & REMAINDERS

• RPL Receives Right Share Offer: Roshan Packages Limited (PSX: RPL) has received an offer from its subsidiary, Roshan Sun Tao Paper Mills (Pvt) Limited (RSTPML), to subscribe to 8.65 million right shares at a par value of Rs 10 each. The total subscription amount will be adjusted against the amount receivable from RSTPML. RPL primarily manufactures and sells corrugation and flexible packaging materials. [MG]
• Pakistan, Russia Boost Energy Ties׆ Pakistan and Russia have signed a protocol to advance mega energy projects, including the Pakistan Stream Gas Pipeline (PSGP), joint oil and gas exploration, LNG supply, and offshore drilling. Both countries aim to develop sustainable gas infrastructure, with Pakistan sharing results of an ongoing energy study by Q3 2025 and continuing talks through Joint Working Group meetings. [ET]
• Opinion: What the Smog Said - “LAHORE is the most polluted city in the world. If the smog had a voice, it would explain why that is unlikely to change despite all the grand-sounding plans floating around. Ironically, it would point to advances in science and technology for that verdict. These cities are amongst the most attractive in the world today, having been transformed beyond recognition through major urban reforms. Does that offer hope for Lahore? Not really, because reform in the former emerged out of a peculiar set of circumstances that will not recur.” - By Anjum Altaf [Dawn]