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ACTION PLAN IN PLACE AS BIPERJOY LIKELY TO HIT PAKISTAN’S COAST TODAY Thursday, 15 June, 2023 I 25 Zilqad, 1444
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Admin, NDMA along with Army, Rangers, Navy in field to protect people, installations
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Overall 67,367 locals shifted to safer locations, 39 relief camps set up in three coastal districts
Staff RepoRt
YCLONE Biparjoy moving closer to Pakistan’s coast and is at a distance of about 310km from Karachi on Wednesday night after it made a turn northeastward, staying on its projected path and is expected to make landfall on Thursday (tomorrow) evening between Keti Bandar in Sindh and Kutch in Indian Gujarat. In its latest alert issued around 9:30pm on Wednesday, the Pakistan Meteorological Department said the cyclone was at a distance of about 310km south of Karachi, 300km south-southwest of Thatta and 240km south-southwest of Keti Bandar. “Maximum sustained surface winds are 150-160km/hour, gusts 180km/hour around the system centre and sea conditions being phenomenal around the system centre with maximum wave height [of] 30 feet,” the alert said. According to the PMD, under the existing upper-level steering winds, the VSCS Biparjoy has been tracked further northward since Wednesday morning, then it will recurve northeastward and cross between Keti Bandar (Southeast Sindh) and Indian Gujarat coast on June 15 afternoon/evening as a Very Severe Cyclonic Storm (VSCS) with packing winds of 100-120km/hour, gusting 140 km/hour. However, the intensity of Cyclone Biperjoy has started to decrease and the situation is not dangerous in Karachi. The storm is only 350 kilometers away from the port city. The NDMA in a Tweet said that Cy-
clone Biparjoy is located 300km southwest of Keti Bandar, 350 km south of Karachi and 360 km south of Thatta. The storm will pass through Keti Bandar and Indian Gujarat after staying in the north in the afternoon of June 15. There is a possibility of light and moderate rain in the city today, and heavy rains are expected during the next two days. While watching its current trajectory, it could be predicted that the cyclonic storm is likely to cause widespread wind/dust storms, as well as thundershowers in Thatta, Sujawal, Badin, Tharparker, Mirpurkhas and Umerkot districts until Friday. These may be accompanied by squally winds of up to 120kmph. Karachi, Hyderabad, Tando Muhammad Khan, Tando Allayar, Shaheed Benazirabad and Sanghar are likely to be hit
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by similar weather, along with squally winds of 60-80kmph, between today and Thursday. On Tuesday, three people died in Indian Gujarat and four drowned in Mumbai. Both Pakistan and India have spurred their efforts to evacuate people from their coastal areas. The NDMA said that the concerned departments are on high alert considering the progress and possible effects of Cyclone Biperjoy. The NDMA urged the people living in coastal areas to follow the instructions of the local administration. Yesterday, Prime Minister Shehbaz Sharif chaired a meeting to review the preparedness ahead of the possible impact of the Biparjoy cyclone. He asked the Sindh government, NDMA and other organizations to ensure the establishment of mobile hospitals in coastal areas and provide adequate emergency
medical assistance there. He said in view of the storm, special arrangements of clean drinking water and food should be made at the camps of displaced persons. The World Health Organization (WHO) also mobilized health sector partners for initiating a preparedness and response plan for Tropical Cyclone Biparjoy. According to WHO, currently, Pakistan is facing the threat of Tropical Cyclone Biparjoy, and due to the threat people living along the coastal areas in Sindh, especially are being evacuated to safer places. WHO Representative in Pakistan, Dr Palitha Mahipala chaired an Incident Management Support Team (IMST) and health sector partners meeting on Tuesday in the wake of severe cyclone Biparjoy and issued immediate directives for preparations for Tropical Cyclone Biparjoy emergency preparedness and response measures. 67,367 locals shifted to safer locations in three coastal districts Overall 67,367 locals have been shifted to safer locations and 39 relief camps were established in three coastal districts before Cyclone Biparjoy hit areas in Sindh. The latest statistics were provided to the Sindh Chief Minister Murad Ali Shah in a report. It stated that overall 67,367 persons were shifted to safer locations from three coastal districts and 39 relief camps were established. 10,000 residents of Keti Bandar were evacuated by the administration and 3,000 locals have voluntarily shifted to other localities. Six relief camps of Keti Bandar can accommodate 5,000 persons while 1,500 families have already arrived there.
PROFIT
Petrol price is estimated to decrease by Rs 1.87 per litre, high speed diesel (HSD) price might see a significant surge of Rs 3.29 per litre, posing challenges for consumers and industries alike. According to sources within the industry, the proposed changes in petrol and diesel prices are based on the current rate of Petroleum Levy and GST. The Pakistan State Oil (PSO) exchange adjustment for petrol is estimated at Rs 3.50 per litre, while for diesel, it stands at Rs 0.31 per litre. Similarly, the government currently imposes an Inland Freight Equalization Margin (IFEM) of Rs 4.04 per litre on petrol and Rs 3.79 per litre on diesel. Likewise, at present the petroleum levy is fixed at Rs 50/litre on petrol and diesel (HSD). Likewise, Oil marketing Companies (OMCs) margin on the sale of petrol (92 RON) is fixed at Rs 6/litre and Rs 5/litre on HSD. Furthermore,
fixed dealer’s commission on the sale of petrol and HSD currently stands at Rs Rs7/litre. If approved, the decrease in petrol price would result in an ex-depot price of Rs 260.13 per litre, compared to the current market rate of Rs 262 per litre. However, diesel price could soar to an ex-depot price of Rs 256.29 per litre, rising from the current market rate of Rs 253 per litre. These potential changes have raised concerns among consumers who rely heavily on diesel for transportation and power generation. In contrast, kerosene prices are expected to witness a hike of Rs 2.10 per litre, reaching an ex-depot price of Rs 166.17 per litre, while Light Diesel Oil (LDO) might experience an increase of Rs 2.48 per litre, bringing the ex-depot price to Rs 150.16 per litre. These adjustments could impact households relying on kerosene for cooking and LDO for various industrial processes. The fluctuations in fuel prices reflect the government’s ongoing efforts
to strike a balance between stabilizing the economy and addressing the challenges in the energy sector. The government aims to maintain reasonable prices for citizens while managing the fiscal constraints faced by the country. The anticipated decrease in petrol prices is expected to provide some relief to motorists, as the cost of running vehicles is likely to be slightly reduced. However, the substantial increase in diesel prices might pose a burden on industries such as transportation, agriculture, and manufacturing, where diesel is a primary source of fuel. As the government finalizes its decision on fuel prices, stakeholders are closely monitoring the situation, anticipating the impact it will have on their operations and expenses. The fluctuations in fuel prices could have broader implications for the overall cost of living and economic stability in the country. It is worth noting that these proposed changes are subject to approval by the
PESHAWAR
Staff RepoRt
Peshawar High Court (PHC) Chief Justice Musarrat Hilali is set to become the second woman judge of the Supreme Court after the Judicial Commission of Pakistan (JCP) unanimously approved her nomination on Wednesday. Justice Hilali’s name will now be sent to the Parliamentary Committee on Judges Appointment for approval. A meeting of the JCP was held under the chairmanship of Chief Justice of Pakistan (CJP) Umar Ata Bandial to consider Justice Hilali’s ascension to the apex court. Her name was initially suggested for elevation by Justice Qazi Faez Isa. It was subsequently agreed to be officially nominated by CJP Bandial. She will be the second woman judge of the SC after Justice Ayesha Malik was appointed in January 2022. Since March 2013, she has been the only woman on the bench of the Peshawar High Court. She is the third woman to sit on the bench in Khyber-Pakhtunkhwa and was the first chief justice of the PHC.
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ECC allows PLL to execute proposed agreement with Azerbaijan Republic’s (SOCAR) trading g
PLL to secure long term LNG supply contracts, under the framework PROFIT
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Petrol price estimated to decrease, diesel to surge for second half of June ahmad ahmadani
JCP ‘unanimously’ approves Justice Hilali’s nomination as SC judge
Shahzad paRacha
government. The final decision will depend on a careful assessment of various factors, including global oil prices, currency exchange rates, and the financial implications for the energy sector. In Pakistan, petrol (also known as gasoline) is primarily used as a fuel for vehicles, including cars, motorcycles, and other modes of transportation. It is the most widely consumed fuel type in the country. Petrol is also used in power generators, small engines, and some industrial applications. High-Speed Diesel (HSD), also known as diesel fuel, is extensively used in Pakistan for various purposes. It is the main fuel for heavyduty vehicles such as trucks, buses, and tractors. HSD is also commonly used in generators, construction machinery, agricultural equipment, and boats. Additionally, it serves as a fuel for industrial processes, including manufacturing and power generation.
The Economic Coordination Committee (ECC) of the Cabinet has allowed Pakistan LNG Limited (PLL) to execute the proposed framework agreement with State Oil Company of Azerbaijan Republic, SOCAR trading. The meeting of the ECC was held under the chair of Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar. The Ministry of Petroleum presented the summary with regards to the approval of the framework agreement between PLL and SOCAR trading. As per the summary, PSO and PLL are importing liquefied natural gas under the long term LNG supply contracts to minimise the gas demand and supply gap. Pakistan LNG Limited (PLL) is a public sector entity which operates under the governance of the Ministry of Energy (Petroleum Division), Government of Pakistan (“GOP”). The company operates on the strategy of solving Pakistan’s energy and gas crises. For the longest time, PLL has been importing up to 3 LNG cargoes through spot tendering conducted from time to time to meet seasonal peak demand. Spot tendering refers to a need-based procurement of the said LNG from the international spot market of LNG, the prices in which are subject to many volatilities. However, PLL has been facing considerable difficulties in procurement of spot LNG cargoes since June 2022, owing to exorbitantly high international LNG prices as well as Pakistan downgraded credit rating. Apart from the developments made in the ECC session today, the PLL has also been exploring availability of a greater LNG volume through government-to-government (G2G) agreements with different countries.
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THAT’S ALL FOLKS!
Shell exiting Pakistan: What does it mean and what could this transaction look like? DANIYAL AHMAD AND AREEBA FATIMA
Shell Petroleum, one of the world's preeminent oil and gas conglomerates, has declared its intention to relinquish its stake in Shell Pakistan, its subsidiary in the nation. This resolution, made on June 14, heralds the termination of a 76-year-long partnership dating back to 1947. In a detailed press release that followed the announcement, Shell said that the decision to divest its interests in Pakistan was part of a constant effort to streamline its portfolio and that the oil giant was departing Pakistan. The decision, the company insisted, “was not made frivolously.” It is now looking to sell more than 77% of its shares in Shell Pakistan. In short they have had enough. The truth is that Shell has in earnest been streamlining their portfolio over the past few years and getting out of Pakistan has always been a part of that conversation. But what was the final straw that finally broke the camel’s back? Some would point towards rising political instability and the conditions in the Pakistani market that make it very difficult to conduct business in this country. But there is more than meets the eye in Shell’s exit from Pakistan. For starters, the company is not wrapping up proceedings. Instead, the global headquarters of Shell is
selling their stake in the company that is Shell Pakistan. But why are they selling? What makes Pakistan such a difficult market? Who could possibly step up as a buyer? And with the forex situation in the country seriously backlogged, can the transaction even take place right now? Why is Shell leaving? There are two parts to this. The first is that Shell has been wanting to leave Pakistan for years as it is. The second is that the oil marketing business has globally gotten tougher over the past few years — which means difficult markets like Pakistan have become more burdensome. “There are two aspects to this story - one that Pakistan’s economy is deteriorating as a market for Shell, and second that Shell announced a review of their retail business in Europe some 5 to 6 months ago and has been looking into the decision of divesting from retail business in the UK, Netherlands and Germany,” says Mustafa Pasha, the Chief Investment Officer (CIO) at Lakson Investments. Shell first indicated that it was looking to drastically change its presence and streamline its activities back in January 2023, when the company contemplated exiting its home energy retail business in the UK, the Netherlands, and Germany citing "tough market conditions". This means that the exit is not an isolated issue that has to do with Pakistan.
But it still makes for terrible optics. “Whether the transaction has any real impact in Pakistan is doubtful, but the messaging is very negative, it says that people have lost confidence and are wrapping up businesses in Pakistan. However, political instability is a problem much closer to home,” adds Pasha. Corroborating this sequence of events, columnist and independent macroeconomist Ammar H Khan says that the timing of Shell’s exit may just have to do with them finding a buyer. “Shell has been trying to exit for the last 8 to 10 years, it is possible that only now have they come across a potential buyer and have decided to officially announce this decision,” he says. “Smuggled Irani fuel entering the market has also caused the industry to face more volatility. Established and legitimate industry players like Shell who are not able to participate in the informal market are further marginalised. As long as the government implicitly keeps supporting the black market, MNCs will continue to exit our economy.” However, Habib also highlighted that operationally, this decision has little impact on the overall industry beyond sending a negative market signal and solidifying international investors’ uncertainty while dealing with the Pakistani markets.
What made the Pakistani market so difficult for Shell? We know that Shell has been reconsidering its portfolio globally. But we also know that the oil giant has been unhappy being in the Pakistan market for the last decade. That is because of very specific peculiarities of this country’s oil markets that make it a difficult place to conduct business in. "In Pakistan the milieu for oil management companies is exceedingly arduous. The regulatory environment renders operation in the country onerous, explains Pasha. "Federally implemented price changes have precipitated significant exchange and inventory losses. For years, oil management companies have encountered impediments importing the raw materials they require." "Supply chain issues only exacerbate the conundrum. Collaboration with Pakistan is met with hesitation and business confidence is low. The pricing environment is a veritable minefield, stringently regulated by the government." As a result, many have not been surprised by the news. One highly placed industry source that wished to remain anonymous told Profit that the decision was long overdue. “Shell has been threatening to leave Pakistan for the past decade or so. This was writing on the wall,” they said.
"Successive governments, through erratic devaluation, have increased the risk exposure that companies with dollar-based structures must incur. It's not viable for these companies. Multinationals have these dollar-based structures because the Shell Group, like others, has central costs that it must incur globally. You cannot change that for any country." “The incompetence of past governments has led to this problem while current incompetence has merely expedited the process as a whole." Yousuf Farooq, ex-Director of Research at Topline Securities and independent analyst, explains that "Historically, Shell has encountered impediments due to turnover tax and has never been able to generate as much revenue as they could have. Their profitability has always been problematic." “Look Shell has been wanting to leave for years but this is the first time they have issued a notice. So what could be behind that,” explains Khan. "They are already in the electricity distribution business and have been withdrawing from that market. In the retail business, they have been present for over a century, so they are exiting their core business of fuel delivery after essentially 100 years."
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