Rice Export Aims, Power Sector, RISE-II Funding, Govt Auctions, Yemen in the Red Sea, Global Gold Prices.

TOPLINE

• Rice exporters in Pakistan aim to reach USD 3 billion in the current fiscal year and target USD 5 billion by 2025.
• The ECC approved a Rs 320 billion payment to public sector power plants and K-Electric. In November, the power generation cost increased by almost 20% YoY, reaching Rs 7.17/kWh, up from Rs 5.99 same time last year.
• The World Bank has approved $350 million in financing for Pakistan's Second Resilient Institutions for Sustainable Economy (RISE-II) project.
• The government raised a record Rs 397 billion ($1.4 billion) in a local bond auction, exceeding expectations and signaling strong investor confidence in long-term bonds amid expectations of an early 2024 rate cut. The government of Pakistan is set to announce a new Sukuk auction calendar, aiming to raise up to Rs 110 billion through 3 and 5-year variable and fixed-rate Sukuk.
• Yemen's Houthi leader threatened to strike US warships in response to potential attacks, following the establishment of a multinational force by the U.S. to counter Red Sea vessel attacks. Vessels are avoiding the area or canceling contracts due to uncertainty.
• Global Gold prices remained steady above the crucial $2,000 level, supported by anticipations of interest rate cuts by the Fed in 2024. Investors were awaiting US inflation data scheduled for later in the week.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Pakistani Rice Exports: Ambitious Growth Goals - Rice exporters in Pakistan aim to reach USD 3 billion in the current fiscal year and target USD 5 billion by 2025, attributing optimism to higher production, especially in coarse varieties from hybrid seeds. Shahzad Ali Malik, former chairman of the REAP, anticipates that the continuous growth in rice production and exportable surplus could propel rice exports to USD 10 billion by 2028. [BR] [Dawn]
• Regional Cotton Rates in Pakistan: In Sindh, the cotton rate ranges from Rs 15,500-18,000/maund, with Phutti priced between Rs 5,000-7,000/40 kg. In Punjab, cotton prices range from Rs 15,800-18,000/maund, and Phutti is between Rs 6,500-7,000/40 kg. Balochistan registers cotton prices at Rs 16,500-17,000/maund, with Phutti ranging from Rs 6,500-8,200/40 kg. [BR]
• Rare Oriental Darter Reappears in Sindh After 29 Years: A rare Oriental Darter, not seen in Sindh for 29 years, made a surprise appearance at Langh Lake, delighting birdwatchers and highlighting a significant moment for local conservation efforts. Known for their spear-like beaks and swimming prowess, these "snake birds" are expert divers, preferring shorter journeys than many migratory birds. [ET] [The Nation]
• A 16.29% increase in exports to 7 countries has been recorded in the first five months of FY' 23-24. [ET]
• Metal Import: Rs 30.2 billion was the import value of iron and steel scrap in Oct 2023, up 16.3% from Oct 2022. [ET]
• Gemstone Export: According to the PBS, Rs82 million was the export value of manufactured onyx in Oct 2023, down 13.6% compared to Rs 95 million in Oct 2022. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• ECC Takes Action on Power Sector - The ECC approved a Rs 320 billion payment to public sector power plants and K-Electric, aiming to meet an IMF condition by phasing out the export finance scheme. [Dawn] [ET]
• World Bank Backs RISE-II: $350M Boost for Economic Reforms - The World Bank has approved $350 million in financing for Pakistan's Second Resilient Institutions for Sustainable Economy (RISE-II) project, designed to conclude the first phase of reforms in tax, energy, and business climate for improving fiscal revenues and fostering competition and investment. [Dawn] [ET]
• NEPRA Greenlights Extra Charge: Rs 1.15/Unit Nationwide - NEPRA has approved an extra charge of Rs 1.15/unit for electricity consumers nationwide, including K-Electric. K-Electric consumers will face an additional Rs 1.72/unit for January-March 2024, totaling Rs 2.87/unit, to address tariff adjustments and establish a uniform regulatory regime. [Dawn]
• Power Shift: Pakistan Aims for 61% Renewable Energy by 2030 - Caretaker Minister for Power, Muhammad Ali, announced on Wednesday that the government is developing a plan to increase the share of hydel and renewable energy in the total energy mix from the current 31% to 61% by 2030. [BR]
• Power Generation Costs Up 20%: In November, the power generation cost in the country increased by almost 20% year-on-year, reaching Rs 7.17 per kilowatt-hour (kWh), up from Rs 5.99 in the same month the previous year. This surge was attributed to a greater reliance on expensive fossil fuels, coupled with a decline in nuclear and renewable energy sources, as reported by Arif Habib Limited (AHL). [The News] [ET]
• ECC Nod: Rs 319 Billion Subsidy for K-Electric & Power Plants - The Economic Coordination Committee (ECC) of the Cabinet, led by caretaker Finance Minister Dr Shamshad Akhtar, has approved an advanced subsidy of Rs 57 billion for clearing K-Electric arrears and Rs 262.075 billion for public sector power plants through Technical Supplementary Grants. The decision was made based on a summary presented by the Ministry of Energy (Power Division). [BR] [Dawn]
• IMF-Approved Budget: Power Subsidy Unchanged - The Finance Division has declined to raise the power sector subsidy, citing financial constraints, as revealed in a recent ECC meeting. The government has allocated Rs 970 billion for the power sector subsidy in the 2023-24 budget, a figure approved by both the IMF and World Bank. [BR]

AGRI UPDATES & PAKISTAN POLICY

• State Bank to Conduct Sukuk Auction on December 21, 2023: To bolster its financial position, the government of Pakistan is set to announce a new Sukuk auction calendar, aiming to raise a significant amount of up to Rs 110 billion through 3 and 5-year variable and fixed-rate Sukuk. The auction, scheduled for December 21, 2023, with the Islamabad Sports Complex serving as the asset for the Sukuk issuance. [BR]
• Long-Term Confidence: Government Signals with Record Auction - The government raised a record Rs 397 billion ($1.4 billion) in a local bond auction, exceeding expectations and signaling strong investor confidence in long-term bonds amid expectations of an early 2024 rate cut. This strategic move aims to reduce rollover risks and minimize reliance on short-term funding in the future. [BR]
• National Savings Scheme Rates Revised by CDNS: The Central Directorate of National Savings (CDNS) has adjusted the rates of return for certain National Savings Schemes. Special Savings Certificates (SSC) rates have decreased to 16.4% from the previous 18%, Short Term Savings Certificates (STSC) will now yield 20.8% instead of 21.72%, and Regular Income Certificates (RIC) return has been reduced to 15.12% from 16.08%. [BR]
• Pakistan's Army Chief Aspires for Economic Connectivity Hub Status: COAS Gen Munir expressed Pakistan's desire to be an economic connectivity hub without involvement in bloc politics or the US-China rivalry during a meeting with US scholars. [Dawn]
• Imran Khan to Contest Elections from Jail in Three Constituencies: Jailed former Prime Minister Imran Khan is set to contest the upcoming general elections from three constituencies in Lahore, Mianwali, and Islamabad, according to PTI Chairman Gohar Khan. Gohar, after visiting Imran Khan in Adiala Jail, stated that nomination papers would be provided on Thursday, expressing confidence in Khan's participation in the polls. [Dawn]
• Baloch Women's Long March Hits Islamabad, Faces Police Obstruction: A long march led by Baloch women protesting against enforced disappearances and extrajudicial killings reached the outskirts of Islamabad. Police blocked entry points and major arteries, including Jinnah Avenue and Srinagar Highway, to prevent the protesters from reaching the National Press Club, causing significant traffic jams in the federal capital. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide: Red Sea Crisis - Yemen's Houthi leader threatened to strike US warships in response to potential attacks, following the establishment of a multinational force by the U.S. to counter Red Sea vessel attacks. The Houthis, controlling significant Yemeni territory, cited retaliation for Israel's actions in Gaza. Vessels are avoiding the area or canceling contracts due to uncertainty about the initiative launched on Tuesday and the coalition's engagement in the event of further attacks at sea. [Dawn] [BR] [Al Jazeera] [Reuters] [NYT] [AP] [CNN]
• UN Climate Events Marred by Harassment of Environmental Activists: Environmental activists and campaigners at UN events, including the recent COP28 in Dubai, have reported harassment, threats, and intimidation. Instances of "de-badging" and concerns about monitoring on platforms like WhatsApp have created a climate of fear, inhibiting their ability to speak out on critical issues due to fears of reprisals from governments or fossil fuel industries. [Dawn] [France24] [The Guardian] [UN] [Al Jazeera] [CCN]
• G20's FSB & IOSCO Focus on Shadow Banking Leverage: Global financial regulators, including the G20's Financial Stability Board (FSB) and IOSCO, prioritize addressing hidden leverage in the multi-trillion dollar "shadow banking" sector next year. However, challenges in accessing data may impede progress. The regulators have issued tougher liquidity management guidance for asset managers of open-ended investment funds to enhance oversight. [BR] [Reuters] [IMF] [Yale]
• Gold Holds Firm Above $2,000 on Fed Rate Cut Expectations: Gold prices remained steady above the crucial $2,000 level on Wednesday, supported by anticipations of interest rate cuts by the Federal Reserve in the coming year. Investors were awaiting US inflation data scheduled for later in the week. Spot gold held steady at $2,033.89 per ounce, while US gold futures dipped 0.2% to $2,047.00. [BR] [Nasdaq] [Yahoo] [BT] [Reuters]
• Energy Markets React: Brent Crude & WTI Prices on the Rise - Brent crude neared $80 per barrel on Wednesday due to concerns over global trade disruptions and Middle East tensions from Red Sea ship attacks by Yemen's Houthi forces. Brent crude futures rose 0.8% to $79.83, while US West Texas Intermediate increased 0.9% to $74.61. The benchmark palm oil contract for March delivery on Bursa Malaysia Derivatives Exchange gained 0.51% to 3,775 ringgit ($810.61). [BR] [BR] [Dawn] [Investing] [FT] [BI] [TE] [MT] [MW]

PAKISTAN - REMAINDERS

• Sindh CM Finds Majority of RO Plants Inoperative: During a visit to Tharparkar, Caretaker Sindh Chief Minister Justice (retired) Maqbool Baqar was surprised to find that 555 out of 834 reverse osmosis plants in the district, including the touted Asia's largest solar desalination complex in Mithi, had stopped functioning. In response, he ordered a forensic audit of the company responsible for operating the plants. [Dawn] [ET]
• Indus Motor CEO Predicts Rise in Pakistan's Auto Sales: Auto sales in Pakistan are expected to rise from January 2024, as stated by Ali Asghar Jamali, CEO of Indus Motor Company. [BR]
• Karachi's Abhi Raises $21M in Venture Capital Funding with investors including Global Ventures and VentureSouq. The company has also raised $15 to $20 million in debt funding across different markets. [BR]
• Opinion: Climate Resilience - “The screening of development projects through the lens of climate resilience requires a paradigm shift in development planning and budgeting. The International Monetary Fund wants Pakistan to introduce this shift through the FY2024-25 budget. Prodding the ministries of finance and planning, the IMF has prescribed making budget documents more explicit on the nexus between the budget and climate-related action.” - By Naseer Memon [Dawn]
• Opinion: Hunkering Down - “A good example of how Pakistan is hunkering down further and further in the face of increasing scarcities is provided by natural gas. Pakistan has been blessed with abundant gas discoveries from a very early age, and one of the first public sector enterprises created in the country was Pakistan Petroleum in 1950. Since Esso was an oil company, they could not figure out what to do with their gas find and left it for a few years. It was not until later that somebody somewhere figured out that they could manufacture fertilizer instead, if only the government could negotiate an appropriate price with them, given that fertilizer was a controlled price product.” - By Khurram Husain [Dawn]
• Opinion: Pakistan’s Aramco deal - “Pakistan’s overall competitiveness and position in the global market. The SIFC has proven to be an effective platform for promoting foreign direct investment and fostering sustainable economic growth in Pakistan. Saudi Arabia’s substantial investment has sparked renewed hope for a prosperous future in Pakistan. In a ground-breaking move, the esteemed oil giant Aramco has recently finalized agreements to acquire a substantial 40% equity stake in Gas & Oil Pakistan Ltd (GO), signaling its entry into the highly lucrative fuels retail market of Pakistan.” - By Hira Tahir [BR]