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Rupee hits new low at 240

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KARACHI:

Pakistani currency tested a new all-time low of Rs240 against the US dollar in early trading on Wednesday, but towards the end of the day the currency recovered partially and closed at Rs239.65.

The rupee lost a fresh 0.31% (or Rs0.74) on a day-to-day basis. It was just Rs0.29 away from the record low close of Rs239.94 hit on July 28, 2022.

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The partial recovery suggests the currency has resisted a bigger fall and may consolidate around current levels in the short run.

Wednesday was the 14th consecutive working day when the currency depreciated without any break. With the latest drop, it has cumulatively lost 11.67% (or Rs25.05) in the past 14 days.

The rupee has maintained its downward streak in the wake of elevated demand for US dollar for import and foreign debt payments.

On the other hand, supplies of the greenback have remained limited via export proceeds and worker remittances.

The gap between higher demand and lower supply of dollar is bridged through foreign exchange reserves. The reserves have continued to deplete since January 2022 and reached critically low levels of less than six weeks of import cover at around $8 billion.

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The shrinking forex reserves are not letting the currency stabilise, which is falling every passing day.

More importantly, the US dollar has continued to strengthen against a basket of global currencies since the US central bank (Fed) hinted at further hiking its benchmark interest rate to control a decades-high inflation.

Besides, flood losses in Pakistan have increased the demand for dollar for import of agricultural products including cotton. On the other hand, textile exporters fear losing orders amid high inflation in the West, which may slow down the inflow of dollars.

As a result, the rupee may continue to remain under pressure against the greenback.

Experts, however, believe the rupee should consolidate around current levels instead of maintaining its free fall.

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The government should take measures to help the rupee stabilise and recover. It should announce a roadmap for sustainable economic growth and building reserves instead of only looking at friendly countries for bailout packages, they say.

The downward streak has made rupee the worst-performing currency in emerging markets. It may spark a wave of very high inflation in the country.

An emerging markets analyst said the delay in arrival of promised funds from the Gulf Cooperation Council (GCC) countries was impacting the rupee these days.

Earlier, the local currency won the title of best-performing currency in emerging markets in August 2022.

Published in The Express Tribune, September 22nd, 2022.

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Oil import, consumption rise

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ISLAMABAD:

Pakistan’s import and consumption of petroleum products have increased significantly, according to an industry report, indicating a rise in economic activities and consumer demand across the country.

In the “State of the Regulated Petroleum Industry” report for fiscal year 2020-21, the Oil and Gas Regulatory Authority (Ogra) provided data that showed a growth in the midstream and downstream petroleum sector, which included oil, gas, liquefied natural gas (LNG), liquefied petroleum gas (LPG) and compressed natural gas (CNG).

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In FY21, the import of crude oil surged 27.82% as it reached 8.66 million tons compared to 6.77 million tons in FY20. Similarly, the import of finished petroleum products rose 23.70% to 10.02 million tons in FY21 from 8.10 million tons in previous year.

However, the import of aviation fuel dived 72% from 0.17 million tons to 0.05 million tons.

Refineries in Pakistan also stepped up production at their plants during FY21 as their output of petroleum products increased 14.48% and touched 10.66 million tons as opposed to 9.31 million tons in FY20.

In the year under review, the consumption of petroleum products in the country rose 12.95% to 19.92 million tons as compared to 17.63 million tons in previous year.

Pakistan State Oil (PSO) increased its market share by three percentage points from 44% in FY20 to 47% in FY21.

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Besides, oil marketing companies set up infrastructure facilities like oil storages with capacity of 0.58 million tons for petrol and 0.88 million tons for high-speed diesel at various depots across the country by the end of FY21.

In the year under review, Pakistan’s gas production, however, dropped over 6% to 2,006 million cubic feet per day (mmcfd) from 2,138 mmcfd in FY20, whereas gas consumption grew over 5%, reaching 3,884 mmcfd from 3,683 mmcfd.

The country had a network of 13,768 km of gas transmission pipelines and 191,478 km of distribution pipelines, thus ensuring natural gas supplies to domestic, industrial, commercial and transport sectors.

Gas utilities expanded their transmission and distribution network to cater to the demand from new consumers.

Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) extended their transmission networks by 37 km and 17 km respectively during FY21. In the meantime, SNGPL extended its distribution network by 7,141 km and SSGC by 929 km.

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The Ogra report revealed that a significant number of new subscriptions had been added as SNGPL connected 371,618 new consumers during FY21, taking total consumers to 7.41 million on its network. Similarly, SSGC added 95,436 new connections, taking the total to 3.21 million consumers on its network.

In terms of sectors, the main consumer of natural gas was the power sector, consuming over 30% (1,305 mmcfd), followed by the domestic sector with 20% (862 mmcfd), fertiliser 19% (829 mmcfd), general industry 8% (365 mmcfd) and captive power 5% (203 mmcfd).

Among provinces, Punjab’s consumption came in at 52% (1,426 mmcfd), Sindh 39% (1,052 mmcfd), Khyber-Pakhtunkhwa 7% (190 mmcfd) and Balochistan 2% (64 mmcfd).

Province-wise gas supply showed that Sindh’s share in total gas supply declined 11% from 1,344 mmcfd in FY20 to 1,192 mmcfd in FY21, Punjab’s share dropped 9% from 91 mmcfd to 83 mmcfd and Balochistan’s share fell 1% from 335 mmcfd to 333 mmcfd.

In contrast, Khyber-Pakhtunkhwa’s share increased 8% from 368 mmcfd to 398 mmcfd. The share of LNG increased 13% from 857 mmcfd to 969 mmcfd.

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During the year, Ogra formulated the Pakistan Gas Network Code, which provides a uniform contractual framework for third-party access arrangements for the use of gas pipeline transportation systems and accommodates project-specific arrangements.

Under the third-party access regime, Ogra, in addition to granting licences for the construction of LNG terminals by Energas and Tabeer Energy, issued licences for the transmission and sale of natural gas/ re-gasified LNG to a number of applicants including K-Electric, Energas, Tabeer Energy and Shell.

Under the relevant provisions of Third-Party Access Rules 2018 and Pakistan Gas Network Code, Ogra has been ensuring the allocation of pipeline capacity by transporters – SNGPL and SSGC – for the interested shippers.

The report stated that LNG imports increased 13% from 857 mmcfd to 969 mmcfd during FY21 whereas its share in overall natural gas supplies rose to 33% from 29% a earlier year.

Published in The Express Tribune, September 24th, 2022.

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UAE seeks investment for ramping up exports

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ISLAMABAD:

The United Arab Emirates (UAE) is an emerging hub of trade and investment activities and is striving to attract $150 billion in foreign investment by 2030, which provides Pakistani investors an avenue for trade and business, said UAE Ambassador Hamad Obaid Ibrahim Salem Al-Zaabi.

Speaking as chief guest at the “Explore UAE” event, organised at the Islamabad Chamber of Commerce and Industry (ICCI) in collaboration with the UAE embassy, the ambassador said that in 2022 the UAE and Pakistan were celebrating 50 years of their unique brotherly ties, which should be transformed into growing trade and economic partnership.

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The UAE was connected to over 250 cities around the world and investing in the Gulf emirate would enable Pakistani investors to promote exports to many parts of the world, he pointed out.

At the event, UAE’s Ministry of Foreign Affairs and International Cooperation Economic Adviser Ahmed Mohammad Aljneibi gave a detailed presentation to the business community on the topic of “Invest Emirates”.

“The UAE is an ideal destination for investment as it has a low tax environment and offers new opportunities for pouring capital across both mainland and free zones,” he said.

He highlighted transportation, storage and construction, agriculture, industrial manufacturing, renewable energy, hospitality, information and communication technology, professional, scientific and technical activities, administrative and support services, educational activities, healthcare and arts and entertainment as potential areas of investment in the UAE.

Speaking on the occasion, ICCI President Muhammad Shakeel Munir said “the UAE has emerged as one of the major trading partners of Pakistan and we would like to further strengthen ties with it.”

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He cited that bilateral trade between Pakistan and the UAE had crossed the $10 billion mark in 2021-22, which could be further enhanced with strong efforts from both sides.

Pakistan’s exports to the UAE included garments, meat, cereals, other food items, agricultural products, fruits and vegetables. “There is a great potential for exports of many other Pakistani products as well which include financial and software-related products, mangoes, oranges, kinnows and rice.”

Published in The Express Tribune, September 24th, 2022.

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US bitcoin emissions as dirty as 6 million cars: report

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LOS ANGELES:

The carbon footprint of the US bitcoin industry is rising at breakneck speed, a report from environmental groups found on Friday, now rivalling the emissions of 6 million cars each year.

The groups urged US states to consider bans on new mining operations to help protect the planet.

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Emissions from the energy-hungry sector could undermine goals to tackle climate change, said Jeremy Fisher, an energy analyst with the non-profit Sierra Club and a co-author of the report.

“We’re at an inflection point,” he said. “We’re trying to rapidly decarbonise… Bitcoin mining has the potential to undo some of that progress.” The industry’s carbon footprint, the groups said, was 27.4 million tonnes from mid-2021 through 2022 – three times that of the largest US coal plant – or close to the annual emissions of 6 million cars, according to a calculator from the Environmental Protection Agency.

Bitcoin mining involves a network of energy-intensive computers that verify bitcoin transactions, and compete among themselves for new coins. Only 3.5% of global bitcoin mining was located in the United States in 2020 – now it’s approaching 38%, according to a recent study from the White House.

The groups urged US states to consider blocking new mining operations. This year, the New York legislature passed a law to pause any new operations in the state that run on fossil fuel.

Bitcoin industry groups say the cryptocurrency sector is greener than other heavy industries and uses a relatively small amount of electricity – between 0.09% and 1.7% of total US power, according to the White House report. The Bitcoin Mining Council, which represents some major players in the sector, has released data showing that more than half the power used by its miners comes from renewable sources. (Thomson Reuters Foundation)

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Published in The Express Tribune, September 24th, 2022.

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