Friday, July 26 2024

Stocks tumble 928 points on political tensions
Pakistani shares snapped a two-day recovery spree on Thursday as investors resorted to profit-taking in a volatile session, dragging the benchmark index below 79,000 despite a bullish start on better corporate results. Ahsan Mehanti of Arif Habib Corporation said the stock market witnessed an across-the-board downturn due to political uncertainty. He said investor concerns about a settlement of $15 billion due to Chinese IPPs, a surging power tariff impacting industrial earnings, political noise over banning opposition, and a weak rupee led to a bearish close. Topline Securities Ltd said the selling spree towards the last hours of the session wiped out early gains. During the session, blue-chip stocks like Bank Al-Habib, Hub Power, Systems Ltd, MCB Bank and Meezan Bank negatively contributed 396 points to the index. Conversely, PSO, Pakistan Oilfield and Attock Petroleum saw some buying interest as they added 40 points.
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The billionaires bash
THERE is nothing quite like a punch-up among the billionaires. That is exactly what we have going on these days with the whole ‘capacity payments to Independent Power Producers’ (IPPs) issue. If you’re confused about what exactly is going on and trying to figure out who is right in all of this, let me help you with one simple line: this has nothing to do with you. Relax. Here is what’s happening: a fight has broken out between the textile lobby and the power generation companies of this country. Both sides are large controllers of capital. Both have access to organised lobbying bodies. Both command clout with the government. But one can influence the narrative as it plays out on TV much better than the other because people are already crushed under electricity bills and are preparing to experience another hike when bills for July are delivered in a couple of weeks.
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Mini budget on the horizon?
The prospects of success for Pakistan’s economic reforms under the International Monetary Fund (IMF) programme remain tenuous, with significant challenges ahead for the government and economy, opine business leaders. Earlier this month, Pakistan and the IMF reached a Staff-Level Agreement (SLA) for a $7 billion Extended Fund Facility. The IMF-mandated reforms included increases in tax revenues to 1.5 per cent of GDP in FY25 and 3pc over the 37-month programme. “Revenue collections will be supported by simpler and fairer direct and indirect taxation, including by bringing net income from the retail, export, and agriculture sectors properly into the tax system,” IMF’s statement said.
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Discos seek additional fuel cost adjustment of Rs2.63
In light of the recent increase in base tariffs, government-owned power distribution companies (Discos) have sought an additional fuel cost adjustment (FCA) of Rs2.63 per unit to extract about Rs35 billion more from consumers in the next billing cycle for the electricity consumed in June. The Central Power Purchasing Agency (CPPA), a subsidiary of the power division, has filed a formal petition before the regulator for an increase of Rs2.63 per kilowatt-hour (unit) over the reference tariff of Rs7.14 per unit already charged to consumers in June. This increase comes even though almost 75 per cent of the power supply was generated from cheaper local fuels, primarily renewables. This proposed increase in FCA is on top of an average 20pc increase in annual base tariff effective July 1. As a result, consumers would have to pay excessive bills amid high consumption in hot and humid temperatures. The power regulator Nepra has acce­pted the request for a public hearing on July 31. It said the CPPA had originally sought Rs2.10 per unit additional FCA but revised it to Rs2.63 per unit.
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Energy ministry calls for framework to deregulate fuel prices
The Ministry of Energy has instructed the Oil and Gas Regulatory Authority (Ogra) to finalise the framework for transferring the responsibility of determining petroleum prices to the oil industry. In a letter issued on Wednesday, the ministry directed the Ogra chairman to convene a meeting today (Thursday) to discuss the analysis, implications, and way forward for deregulating petroleum products. The letter referenced Prime Minister Shehbaz Sharif’s directive to delegate pricing responsibilities to oil marketing companies, but notably, the two main stakeholders — OMCs and dealers — have not been invited to the meeting. Currently, four of the eight petroleum fuels consumed in the country — jet fuels for air force and airliners, hi-octane, and furnace oil — are deregulated, while regulated products include petrol, high-speed diesel, light diesel oil, and kerosene.
Related news categories: business economic-indicators oilgas-marketing