Profit What is happening PARLIAMENT EMPOWERED ECP TO to Pakistan’s edible oil market? DECIDE POLLS DATE: PM KAKAR In partnership with
Rs 15.00 | Vol XIV No 73 I 8 Pages I Islamabad Edition
Tuesday, 12 September, 2023 I 15 Safar, 1445
SAYS SPECULATION REGARDING ELECTIONS 'SHOULD END NOW'
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ISLAMABAD
CLARIFIES CARETAKER GOVT HAS 'NO INTENTIONS TO PROLONG ITS TENURE'
STAFF REPORT
S a counter-measure to President Dr Arif Alvi’s plan to announce a date for general election, Prime Minister Anwaar-ul-Haq Kakar on Monday said the Election Commission of Pakistan (ECP) would decide about the date for the upcoming elections. The prime minister, in an interview with a private television, said the Parliament had passed a law according to which the ECP had the power to announce the date for new elections. Speculations regarding the elections should end which would be held according to the prevalent law, he said, adding, “We have no intention to prolong the tenure of the caretaker government.” He said as a student of the history of Pakistan, he would express gratitude to the Quaid-e-Azam for protecting rights of the Muslim minority and saving it from the domination of majority. After seeing the attitude of bigger states against the minorities, he said, he could see that it would have been difficult to protect the religious and cultural identity of the Muslims if the Quaid had not secured an independent state for the Muslims. He said he admired the Quaid-eAzam for his constitutionalism, all-inclusiveness and for protection of rights of minorities.
The prime minister assured that action against smuggling would continue and the writ of the state would be established. “We are taking these actions so that the new government with its mandate can easily continue our work for public interest.” He said the Apex Committee of Special Investment Facilitation Council (SIFC) included current military leadership, thus making the Council a strong constitutional and legal body which was taking firm actions and implementing decisions. The caretaker federal and provincial governments had good coordination which was helpful in implementing decisions, he noted. He said the SIFC was focusing on economic revival and on sectors of agriculture and mineral extraction. How-
Qist Bazaar has secured a Shariah Compliance Certificate. What does it mean? g
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IN A HISTORIC MOVE THIS WEEK, SECP GRANTS SHARIAH COMPLIANCE CERTIFICATE TO NBFC QIST BAZAAR PROFIT
NISMA RIAZ
The Securities and Exchange Commission of Pakistan (SECP) has for the first time ever granted a Shariah compliance certificate to a licensed non-banking finance company (NBFC) that specialises in Buy Now Pay Later (BNPL) services. The certificate aligns with the Shariah principle of Musawamah, which incorporates profit margins into the sale price of commodities. Qist Bazaar (Private) Limited, the recipient of this coveted certification, received it under the Shariah Governance Regulations of 2018. The startup caters to investment finance services for which it has enlisted the expertise of a Shariah advisor Mufti Ibrahim Essa from Alhamd Shariah Advisory services Pvt Ltd to structure their financial products and services in compliance with Shariah regulations. This unprecedented move marks the issuance of the firstever Shariah compliance certificate for a BNPL platform, representing a significant stride towards promoting Shariah-compliant financial instruments and facilitating novel business models for tech-driven entrepreneurs. The Commission believes that this can be a pivotal framework for the endorsement of Shariah-compliant entities and securities. Arif Lakhani, the co-Founder of Qist Bazaar told Profit that Qist Bazaar is the only BNPL service in Pakistan that has received this certification from SECP and that the certification process spanned nearly a year and involved a comprehensive evaluation, including an audit of their financial operations.
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ever, work would be done on major plans of investment so that they could be at an advanced stage when the next government would take over, he added. PM Kakar said Pakistan had multifaceted relations with Afghanistan and had regular discussions with it on issues of trade, terrorism, security and regional connectivity. Both sides were talking with the realization that neighbours could not be changed, he added. To a question about rising incidents of terrorism in the country, he said the terrorists had now more latest weapons, night vision goggles and other equipment which had increased their capacity to fight. However, he made it clear that the
terrorists could not take away an inch of territory of Pakistan and the security forces would respond and manage the situation. The state would show its firmness against terrorists as in no condition anyone would be allowed to resort to violence, he stressed. PM Kakar said there was no restriction on the Pakistan Tehreek-i-Insaf (PTI) for taking part in the elections. Talking about the incidents of May 9, he said miscreants resorted to vandalism and arson, and the whole incidents were reported by the local and international media. The accused involved in the incidents would be dealt with according to the law of the land, he added. He said Nawaz Sharif was a thrice elected prime minister and when he would come back to Pakistan he would be treated according to the law. He clarified that he had no intention to start meetings with the leadership of political parties. To a question about the foreign policy, he said Pakistan had good relations with all countries, adding China was on the verge of becoming the largest economy of the world and the Western world led by the United States was anxious about it and wanted to contain its influence. Pakistan had adopted the policy of Look Africa to improve its relations with that continent which had a population of more than a billion people, he informed.
President Alvi meets with Law Minister again to decide on date for general elections ISLAMABAD
STAFF REPORT
President Dr Arif Alvi on Monday held another meeting with caretaker Law Minister Ahmed Irfan Aslam for consultation on the upcoming general elections amid rife speculation of an imminent announcement for the poll date. A media report also stated that the president was expected to give the election date at “anytime”, according to “sources privy to the development”. The meeting was held at Aiwan-i-Sadr here in continuation of the ongoing consultation process on elections between the president and the interim government, a week after their first meeting on the subject. “The continuation of the consultation process with good intent will be positive for democracy in the country,” the president was quoted as saying in a statement posted on social media platform X (formerly Twitter). Alvi had emphasised the need to hold elections within 90 days of the National Assembly’s dissolution in last week’s meeting with Aslam. He had also stressed the need to uphold the supremacy of the Constitution, adding that decisions should be taken in accordance with the spirit of the supreme law. According to Article 224 of the Constitution, elections must
be held within 90 days after the dissolution of the National Assembly. This makes the general election due in November. But since the delimitation exercise is unlikely to be completed before Nov 30, elections may be pushed back to late January or early February. The president, Election Commission of Pakistan (ECP), political parties and other stakeholders take differing stances on the time frame for holding general elections and who has the authority to decide the final poll date. The ECP has ruled out elections this year, while the 90-day limit for holding polls ends on Nov 9. It reasons its decision to push elections beyond Nov 9 on the basis of the notification of results of the new digital 2023 census and Section 17(2) of the Elec-
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tions Act, which states: “The commission shall delimit constituencies after every census is officially published.” However, President Alvi had invited Chief Election Commissioner (CEC) Sikandar Sultan Raja last month for a meeting to “fix an appropriate date” for general elections. In his letter to the CEC, the president had quoted Article 244 of the Constitution, saying he was duty-bound to get the elections conducted in the 90 days’ prescribed period as the National Aswas dissolved sembly prematurely on August 9. But a recent amendment to the Elections Act 2017 empowered the ECP to announce the dates for polls unilaterally without having to consult the president. Citing this change to the law, the CEC had responded to the president, saying that participating in a confab with him to decide the election date would be of “scant importance”. Subsequently, the president had sought the law ministry’s advice on the matter, and the ministry communicated to the president that the powers to announce the poll date rested with the ECP after he sought its advice on the matter. Interim Prime Minister Anwaarul Haq Kakar took the same position on the matter during his first interview last week after assuming the top office.
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QUICK ON HEELS OF DALDA, SOYA SUPREME HAS ALSO ANNOUNCED ITS INTENTIONS FOR AN IPO PROFIT
NISMA RIAZ
Soya Supreme has become the second edible oil company to plan an initial public offering (IPO) in recent days. On Friday the 8th of September, company officials announced that Soya Supreme will be getting listed on the Pakistan Stock Exchange (PSX) and conducted an IPO, allowing consumers of their product to own shares in the company. Soya Supreme was established in 1991, under the ownership of parent company Agro Processors and Atmospheric Gases (APAG). Thirty two years later, the company has become a popular consumer brand and is finally ready to go public. Ahmad Ghulamhussain, the CEO of APAG informed Profit that the IPO is expected to happen within the next six months. The exact timing of the company’s IPO will be determined based on prevailing market conditions, Ghulamhussain disclosed in an interview with Reuters. It was further informed that the company’s board has granted authorisation to the management to engage Habib Bank Limited (HBL) and KTrade, a brokerage firm, to commence the IPO process. When inquired about the fundraising target and subsequent valuation of the IPO, Ghulamhussain told Profit that, “It is a premature time to quote an exact target and comment on the size of the public offering, as the company is still awaiting a board approval on the matter.” He did, however, emphasise that Soya Supreme would not be selling existing shares, rather offering additional shares. Soya Supreme’s reasons to opt for an IPO One would imagine that any company going for an IPO has one main motivation to do so; Capital Injection. However, Soya Supreme’s reasons, even though including inflow of capital and its resultant expansion, go beyond just that. Let’s break it down. The company is looking to access growth capital and plans to introduce more industrial fats to their portfolio. They recently diversified their offerings, adding specialised industrial fats, as well as other fats to the list, along with cooking oil, which the company is known to manufacture. With the import restrictions Pakistan tackled this year, importing raw materials became a challenge for the industry. Soya Supreme’s new additions can be seen as a solution to meet the increased demand from local food companies that rely on imports of soybean and palm oil, which were worth approximately $3.7 billion as of last year. “The company plans to improve and expand the export of these specialised industrial fats to regions including the Middle East and North Africa,” Ghulamhussain shared with Profit. So, Soya Supreme dappling in specialised industrial oils will not only serve as a relief to Pakistan’s import difficulties, but also help the country improve its export portfolio. Moreover, the brand offers condiments that include a range of sauces, such as ketchup, mayo and chicken spread. According to Ghulamhussain, the IPO will be used to build this segment further. Lastly, and perhaps most interestingly, the company’s decision to do an IPO is an ideological one. “We are not simply doing this to raise funds. Soya Supreme is a celebrated brand that its consumers have grown to love. We are extending to our consumers the opportunity of owning a part of Soya Supreme,” said Ghulamhussain. According to him, the IPO will allow consumers to own the brand in an unprecedented way and to feel the pride of using a product that they own. The company expects this decision to enable them to not only expand their footprint and capture more of the market’s share, but also to open doors for their consumers to be a part of the brand. Is this a favourable time to go public? Well, despite the fact that the country has seen some of the toughest times, economically and politically, which might be a demotivator for investors, Soya Supreme is not the only company going for an IPO this year. Dalda, which is another consumer staple company, popularly known for selling edible cooking oil is also planning to raise between Rs 3.3 billion to Rs 4.6 billion through an IPO expected to happen in the following months. Dalda delayed its decision to do a public offering earlier this year, due to reasons pertaining to economic instability and poor market conditions. However, the company might finally take the leap, now that there is a competitor in the game, who just so happens to have a little more optimistic approach.
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The gymnastics behind Pakistan’s possible first private LNG cargo import
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PAKISTAN MIGHT BE RETURNING TO THE SPOT MARKET AFTER OVER A YEAR PROFIT
DANIYAL AHMAD
Pakistan Gasport is pursuing a spot deal for liquefied natural gas (LNG) in November, ending a 16-month drought in the country’s spot LNG market. The deal is the possible resolution of a protracted dispute between Pakistan LNG (PLL) and Gasport over the utilisation of excess capacity at an LNG terminal. The two parties signed an agreement in August 2022 to exploit the idle capacity of Gasport’s terminal, which can accommodate 750 million cubic feet per day (mmcfd) of LNG, while PLL only has an allotment of 600 mmcfd. The agreement would enable Gasport to import LNG on its own and slash the capacity charges from $0.42 to $0.38 per million British thermal units (mmbtu). However, the previous government renounced the agreement, leaving the terminal languishing. The caretaker government
has vowed to enact the agreement by 17 September 2023, paving the way for private sector involvement in LNG imports. “I believe there’s immense potential in terms of empowering a private sector company to import LNG. It’s undoubtedly a welcome development because it’s the first step in moving away from the single buyer model that we have for energy in Pakistan,” contends Mustafa Pasha, Chief Investment Officer at Lakson Investments. Why don’t private companies import LNG in Pakistan? Private sector companies in Pakistan have historically refrained from importing LNG for a number of reasons. Firstly, the government owns all of the capacity in the country, and until the Oil and Gas Regulatory Authority passed the Gas Third Party Access Rules (TPA) in 2018, the two Sui Companies had a monopoly on the gas delivery system in Pakistan.
All of this, however, has fortuitously fallen in place for Gasport on account of its aforementioned agreement to allow it to proceed with its maiden venture. “There are no risks at all. We need more private parties doing this, and less government,” declares independent economic analyst Ammar Habib Khan. Whilst historical obstacles might be out of the way for Gasport, it has to grapple with more contemporary ones. Getting the price right “Various countries have presented us with a range of options. If the government or any other entity can procure LNG at a price equivalent to or lower than 12% of Brent, there is a market for it,” Ahmed Z. Iqbal, Chairman of Gasport, informed the media. Ahmed’s calculations amount to approximately $11 per mmbtu. However, on a global scale, futures contracts for LNG in October are trading at
$13.32 per mmbtu on the LNG Japan/Korea Marker (JKM), and $10.78 on the Dutch TTF Natural Gas index. Although TTF may appear to be the optimal purchase, it is important to note that TTF is a physical pipeline index and may not fully account for the cost of liquefying natural gas or accessing the pipeline grid. TTF has become the most liquid pricing location in Europe and often serves as a pricing proxy for the overall European LNG import market, but this caveat remains. Looking beyond October, futures contracts only increase in price, peaking in February for both indexes. However, even from February to June, they remain above the $11 price that Gasport is seeking from the spot market. The spot market is typically more expensive than the futures market, but that does not mean it is impossible to achieve. “We usually purchase at rates lower than the Japan/Korea Marker. The JKM is
generally at a premium compared to the Middle Eastern market, so it is entirely possible to obtain it at a lower price than JKM,” Khan asserts. However, there is no certainty as to whether this can be accomplished. “It’s unlikely, especially when you factor in country-specific premiums that would apply to Pakistan,” Pasha remarks. Pakistan currently has access to LNG at approximately $11-$12 per mmbtu through its long-term contracts, which include agreements with Qatar Energy, Qatargas II T1, and a recent agreement with Azerbaijan. Nonetheless, Pakistan has not shied away from the spot market. According to data provided by the International Group of Liquefied Natural Gas Importers, Pakistan has obtained LNG cargoes from the spot market from Egypt, Malaysia, Oman, Qatar, the UAE, and the USA.
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