Russian oil import- good or bad?
Pakistan for the first time in its history has imported Russian crude - the amount is tiny 100K bbl - its to test the viability.

The buzz is that we got a decent discount (of around $20/bbl)- closer to what India got (Indian deal is better) 1/ The deal is secured by Pindi (as was the case of last LNG deal from Qatar). Islamabad was reluctant in the start for two reasons -1 They are not getting any kickback 2 They didn't want to offend the West
However, the deal sweetener is being diluted by our age old refineries 2/

Petrol cross subsidy model (source @DrMusadikMalik)
Idea is that car users to pay taxes for bikes, rikshaw and small cars (below 800 cc) owners

PSO consumption (50% mkt share) is 47% for 2/3 wheelers & 53% cars/4-wheelers
Based on it, 53% car users to pay taxes for 47% bikes Price mechanics
If OGRA's prescribed price is Rs300/L, retail price to become Rs350 and registered users to get petrol at Rs250/L.
Car folks pay extra Rs50/L
Bike folks save Rs50/L
No subsidy outside petrol sales

53% pays for 47% - price to settle at OMC levels

🧵on Direct Carrier Billing (DCB)
Real issue is lack of $$ and SBP's conscious efforts to curb external payments
Suspension of DCB is a causality. The rebuttal is using 1947 foreign exchange manual. SBP has been disallowing all sorts of foreign payments. Its not telcos fault
1/ If the authorized agent banks of telcos were incorrectly using a certain code why not just penalize them. Why deflect the controversy as if telcos are the wrong?
Why didn't SBP highlighted the issue earlier, as the payment mechanism was just working fine for the past 5 years?
2/

GSK has suspended production for some of Panadol variants. The writing was on the wall.
The company was having marginal loss of 33% or 76 paisa on every tablet they produce - Rs30 mn loss per month. After many months, govt failed to increase the regulated price. 1/ Previous PTI govt was about to increase prices; but VONC came. The new govt got cold feet. Refused to do the necessary. GSK reduced the production to 1/3rd. The product got short in the market 2/

Electricity blackout thread
Due to technical fault in the morning, HVDC 500KV transmission line got tripped. Some fault in Hub area dropped the frequency and cascaded to loss in power from Karachi to Rawat. Later, north area (upto Bahudur Shah) is being isolated and restored
1/ North is being supplied by hydel functioning fine (till Faisalabad). Problem is in South. Here those plants have black start facility (such as many plants in KE system) are restoring the supply. Without restoring NTDC HVDC lines, KE may be able provide 80% power by 5PM
2/

Panadol is short in the market. Shortage to persist. Counterfeit product is spreading. Genuine product is selling in black at 2-3 times the MRP.

Reason - Production is reduced to bare minimum.
Why - Cost of production is higher than regulated selling price.
1/ Govt regulates drugs prices; and in case of Panadol at current cost gross margins are deep in red. Its a crisis. Panadol is 1.75% of pharma sales and by the far the biggest selling brand in the country. It is the only recommended drug in Dengue & have widespread use.
2/

Currency and its outlook- thread
It seems that the market (PKR/USD) is settling around 225. There is no panic today. But without envisaged inflows the situation can get worse anytime.
What happened in the last two days was sheer panic - triggered from Sunday's polls results
1/ There was no extra pressure of payments. SBP knew the numbers and had a plan to cater. But the free fall had triggered snowballing.
How?
Banks usually cover the LC payments partially and rest are covered when they get flows. With freefall in currency, banks panicked.
2/

Good to see you boss on twitter. Its not sensationalism though

Let's run through numbers (Finance 103)

Market data as per SBP revaluation rates
PKR/USD Spot is 174.50
3m Forward Points are PKR4.18
6m Forward Points are PKR7.80
3m KIBOR (mid)= 10.225
6m KIBOR (mid)= 10.585
1/

https://twitter.com/shahzadsaleem/status/1489474061583462400

Calculations: (ignoring LIBOR as it is at negligible level)
3m Forward translates into implied interest rate (IR) of :(4.18/174.5) x (365/91) = 9.60%
6m Forward translates into implied IR of: (7.80/174.5) x (365/182) = 8.96%
Cont...

2/

#Kissan_Card in Punjab is a right step towards direct subsidy to small farmers. Use of technology will reduce the red tapism and corruption in the process.
It is a initiative of Punjab Government under PM's @ImranKhanPTI Khan vision for targeted and smart subsidies 1/6 The subsidies are for agriculture input to 5 million small farmers - especially those for land holders under 5 acres of land.
The yields of these farms is low due to inadequate or improper mix of fertilizers, use of adulterated substandard pesticides n poor quality seeds 2/6

The IPP deal is in final stages.
last week two separate meetings took place by energy and finance teams - one with the PM (on overall reforms of energy sector). The other was with the COAS - specifically on IPPs deal and CD. 1/9 Based on these meetings and IMF's nod, yesterday a proposal is shared with 50 IPPs - pre-94, 94, 2002 and 2006 policy to pay the accumulated CD to materialize IPPs MOUs into agreements. IPPs wanted (out of Rs400-450 bn dues) 1/3rd in cash and 2/3rd in PIBs in a go 2/9

People are asking on Saudi deposits of $2 bn going out impact on PKR
Not much of an impact as the amount has to be paid by SBP - not banks, and potential replacement has been arranged. However, if nothing to replace it would have an psychological impact due to low reserves.
1/4 Its important to note the timeline.
1. Saudi $1 bn roll over is due this Nov - not happening - ministry is saying that this is to replace by Chinese loan - similar price- as this is on 3.2% - this is almost Libor +3%.
2. Another $1 bn of Saudi is due to rollover in Mar 21 2/4

#Currencyupdate
1. PKR appreciated in Oct due to better external flows - SBP's forward liabilities are down by $919mn in Oct- implying that PKR is appreciating despite the fact that SBP is buying from the market 1/4 2. In the last 3 trading days PKR is not appreciating, rather it is actually USD depreciation due to Trump exit - PKR is being depreciated against CYN, Euro and GBP in the last three sessions

3. Current account surplus trend is continued in Oct
2/4

Good show by Khanzada. But he needs to see things holistically. He is right on RLNG historic prices, and on irrelevant response of @SHABAZGIL
But @shazbkhanzdaGEO needs to understand the energy chain complexities before commenting on balatent Furnace oil use. 1/n

https://twitter.com/shazbkhanzdaGEO/status/1324795913295069184

Govt had a few considerations
1) to utilize FO produced by local refineries in order to clear the inventories and keep refineries running not only enable to produce petrol n diesel but also for continuation of domestic oil n gas production 2/n