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OPEC, allies to seek response to coronavirus pandemic

April 04, 2020: OPEC and its allies are due to discuss oil production cuts next week following US President Donald Trump's claim that leading producers Russia and Saudi Arabia will slash output to boost tumbling prices.

The meeting was originally expected to be held via video conference on Monday, but now looks likely to be pushed back to "take place later in the week," said a source close to OPEC, who asked not to be named.

On Thursday, kingpin exporter Saudi Arabia called for an urgent meeting of OPEC and other countries to "stabilise the oil market" following a phone call between Trump and Saudi Crown Prince and de facto leader Mohammed bin Salman.

Oil prices have tumbled since the beginning of the year due the fallout from the coronavirus pandemic -- which has weighed heavily on economies and demand -- and a price war between OPEC kingpin Saudi Arabia and Russia, the key player in OPEC+.

The two countries failed to agree further output cuts at a meeting at the Vienna-based Organization of the Petroleum Exporting Countries (OPEC) last month, leading Riyadh to open the oil taps to flood the market.

OPEC+ member Azerbaijan's Energy Ministry said in a press release that next week's meeting would aim to discuss the adoption of a "new declaration of cooperation".

Russian President Vladimir Putin said Friday that Moscow was prepared to discuss "a reduction in the volume of about 10 million barrels a day, a little less, maybe a little more."

"I believe that it is necessary to combine efforts in order to balance the market and reduce production," Putin said.

According to a Russian source cited by the TASS news agency Friday, US officials have been invited to take part in the meeting.

- 'Poker game' -

Trump surprised investors on Thursday by tweeting: "I expect & hope" Riyadh and Moscow will be cutting back "approximately 10 Million Barrels, and maybe substantially more".

"Could be as high as 15 Million Barrels," he added in a subsequent post.

Oil prices -- which hit 18-year lows earlier this week -- rallied sharply following Trump's statements, marking a record rise in a day's trading on Thursday.

On Friday, Brent stood at $34.11, up 14 percent, and WTI at $28.34, up 12 percent.

However, a deal "at this stage seems more like speculation than something likely to happen quickly," warned Carlo Alberto De Casa of ActivTrades.

Rystad Energy analyst Per Magnus Nysveen, who described next week's meeting as a "poker game", also warned that "the sticking point is how much each producer is willing to cut".

In February, Russia put out some 10.7 mbd, while Saudi Arabia produced 9.8 mbd, according to the last monthly OPEC report.

The US is the world's biggest producer with 13 mbd but its shale oil has a high production cost and is no longer profitable at current prices.

The figures cited for the possible output reduction would represent "a massive 10 percent cut to global output," calculated LCG analyst Jasper Lawler.

"The question is how much has demand dropped because the coronavirus lockdown?" he said, referring to strict containment measures put in place around the world to stem the coronavirus pandemic.

"Ten million barrels is probably still not enough," he added.

Josh Mahony of IG warned that with the chances for a deal "fairly low", the market was "setting itself up for painful disappointment, which could see the gains of the past 48 hours quickly erased."

AFP/APP

Privatization of two power plants is being carried out...

April 04, 2020: Despite COVID-19 situation, Privatisation Commission (PC) team, under the leadership of Federal Minister /Chairman Muhammadmian Soomro continue to keep foreign investors engaged in the Privatisation plan of the Government of Pakistan.

Federal Minister Muhammadmian Soomro along with the Advisor to PM on Energy, Mr. Nadeem Baber held a series of video-conferences/meetings during the current week with the pre-qualified investment parties for the privatization of two power plants (Haveli Bahadursha and Balloki) of National Power Plant Management Company Limited (NPPMCL). Mr. Nadeem Baber replied to questions and queries raised by the investors. Chairman NEPRA also joined the discussion.

The privatization of two power plants is being carried out on priority basis.  Under the supervision of the Federal Minister, the impending legal and technical issues have been sorted out amicably with the provincial governments and line Ministries.

These include True-up tariff by NEPRA, amendment in land conversion rules and water use agreement for power plants by Government of Punjab and alignment of gas supply and power purchase agreements by Power Division and Petroleum Division in the context of RLNG agreements, prevalent till 2025. The relevant information has been uploaded on Virtual Data Room (VDR) for due diligence by the Pre-qualified bidders. Presently investors’ due diligence is in progress, but   physical site visits of the pre-qualified bidders could not be scheduled due to the current national and international lock-down situation and travel restrictions.

In the wake of Corona Pandemic, the pre-qualified bidders have asked for extension in the timelines.  Federal Minister has indicated to review/reconsider the timelines based on facts/situational analysis and rapidly changing national and international market scenarios.

Federal Minister also reiterated that the revival of PSMC is one of the most important objectives of the Ministry of Privatization. Financial Advisors’ Services Agreement (FASA) was signed in January this year with Pak-China Investment Company and Bank of China (BoC).  The progress towards that end started on steady pace. In spite of travel advisories and other issues, and at the insistence of PC, Sinosteel team from China has recently been on visit to Pakistan. All matters regarding legal, financial and land issues of PSM have been discussed with concerned stakeholders. The first draft of HR, financial and tax due diligence has been shared by the financial advisors on April 1, 2020. The draft DDs on HR Financial and Tax have been shared with Ministry of Industries & Production and Management of Pakistan Steel Mills on 2nd April, 2020 for their review and inputs before placing the DDs and proposed transaction structures for approval of competent forum.

Likewise SME Bank Privatisation is also at conclusion stage. Prequalification of Five investors who have submitted their SOQs is likely to be completed by next week and Buyers side due diligence to be completed by end of May provided current pandemic situation improves to some extent. Furthermore, transaction structures of Services International Hotel and divestment of Pak re insurance shares have been finalized. However, strategy is being devised in consultation with Financial Advisors (FAs) to market both these transactions in due course of time depending on the prevailing market conditions and economic situation.

 

Press Release

Oil price barrels ahead as OPEC flags meeting

April 04, 2020: The price of crude oil surged again Saturday after OPEC said it would talk to non-members, notably Russia, giving investors hope for an end to a price war which has created market chaos along with crushed demand because of the coronavirus.

OPEC oil producers and their allies will meet Monday via video conference, a source close to the cartel said. And Russian President Vladimir Putin said his country was ready to cooperate with Saudi Arabia and the United States on a production cut.

"There's certainly a lot of optimism that a deal is going to be done," OANDA analyst Craig Erlam told AFP.

Despite the happy talk in the oil sector, global stock markets fell following another set of devastating American employment numbers, gloomy eurozone services data and news that the number of declared COVID-19 infections passed one million worldwide.

The US economy shed 701,000 jobs in March amid the damage inflicted by the coronavirus shutdowns -- several times the market's consensus forecast -- while the unemployment rate surged to 4.4 percent, the Labor Department reported.

That sent Wall Street to a sputtering finish, with the Dow losing 1.7 percent and the S&P 500 and Nasdaq posting similar falls.

- 'Likely to worsen' -

"The markets are digesting a larger-than-expected drop in March employment, which is likely to worsen on the heels of the past two weeks of spikes in jobless claims that approached the 10 million mark," analysts at the Charles Schwab brokerage said.

OPEC's move meanwhile sparked fresh speculation of an oil production cut, one day after US President Donald Trump ignited a record crude price rally by hinting that Riyadh and Moscow planned to end their price war with a sharp reduction in output.

According to a Russian source cited by the TASS agency, US officials also have been invited to take part in the meeting.

"It is in all parties' interests to agree to a significant cut," said Michael Hewson, an analyst at CMC Markets.

But even reducing output by 10 million barrels per day "is unlikely to be enough to push prices up much higher from here with demand on the floor," Hewson cautioned.

Oil prices had plunged this year as the market reeled from the effects of the new coronavirus pandemic, which depressed demand amid a worldwide economic shutdown with WTI shedding around 65 percent of its value in the first quarter.

A price war, triggered last month by Saudi after Moscow refused to tighten oil supply to counteract the sharp drop in demand, added to the bloodbath.

- 'Recession knocking' -

Equity investors remain hostage to uncertainty as they try to gauge the long-term economic impact of the pandemic, which International Monetary Fund chief Kristalina Georgieva said already has plunge the planet into recession.

Swissquote Bank analyst Ipek Ozkardeskaya told AFP the "complete shutdown of businesses worldwide is taking a heavy toll on the global economy."

"The coronavirus outbreak hits all layers of the population, has had an impact on each and every single business regardless of their size and paralyzed each and every household regardless of their wealth," she said.

"You do not need to be an economist or an expert to predict a meaningful recession knocking on the door."

- Key figures around 2030 GMT -

  • Brent North Sea crude: UP 16.4 percent at $34.84 per barrel
  • West Texas Intermediate: UP 14.1 percent at $28.99
  • New York - Dow: DOWN 1.7 percent at 21,052.53 (close)
  • New York - S&P 500: DOWN 1.5 percent at 2,488.65 (close)
  • New York - Nasdaq: DOWN 1.5 percent at 7,373.08 (close)
  • London - FTSE 100: DOWN 1.4 percent at 5,406.17 points (close)
  • Frankfurt - DAX 30: DOWN 0.5 percent at 9,525.77 (close)
  • Paris - CAC 40: DOWN 1.6 percent at 4,154.58 (close)
  • EURO STOXX 50: DOWN 1.0 percent at 2,662.99 (close)
  • Tokyo - Nikkei 225: FLAT at 17,820.19 (close)
  • Hong Kong - Hang Seng: DOWN 0.2 percent at 23,236.11 (close)
  • Shanghai - Composite: DOWN 0.6 percent at 2,763.99 (close)
  • Euro/dollar: DOWN at $1.0807 from $1.0964 at 2100 GMT
  • Dollar/yen: UP at 108.42 yen from 107.17
  • Pound/dollar: DOWN at $1.2273 from $1.2371
  • Euro/pound: DOWN at 88.04 pence from 88.62 pence

AFP/APP

Weekly SPI Decreases by 2.01 Percent

April 03, 2020 (MLN): The Weekly Sensitive Price Indicator (SPI) for the Combined Group decreased by 2.01% during the week ended Apr 02, 2020 while the SPI increased by 9.27% compared to the corresponding period from last year.

According to data released by the Pakistan Bureau of Statistics (PBS) the Combined Index was at 125.52 compared to 128.1 on Mar 26, 2020 while the index was recorded at 114.87 a year ago, on Apr 04, 2019

Out of the 51 monitored items, the average price of 13 items increased, 14 items decreased whereas 24 items registered no change during the week.

The weekly SPI percentage change by income groups showed that SPI decreased across all quantiles ranging between 2.1% and 1.77%.

The Lowest Income Group witnessed a weekly decrease of 1.77% while the highest income group recorded a decrease of 2%.

On an yearly basis, analysis of SPI change across different income segments showed that SPI increased across all quantiles ranging between 8.27% and 12.66%.

Yearly SPI for the Lowest Income Group increased by 10.44% while the highest income group recorded an increase of 8.27%.

The average price of Sona urea stood at Rs.1684 per 50 kg bag which is 0% lower than last week’s price and 7.32% lower when compared to last year.

Meanwhile, average Cement price was recorded at Rs.541 per 50 kg bag, which is 0.19% higher than the previous week and 9.83% lower than prices last year.

 

Copyright Mettis Link News

SBP extends its relief package to borrowers availing loans...

April 03, 2020: State Bank of Pakistan has continuously been reviewing the challenges arising out of COVID-19 pandemic situation with particular reference to the financial sector and taking measures. Expanding the scope of its recently announced relief package for households and businesses, SBP has taken another major step today. 

State Bank has allowed similar relaxations, as provided under the relief package, on its concessional refinance schemes. Under various refinance schemes loans are provided with preferential terms and conditions to promote growth in priority sectors of the economy.

Now the relaxation allowed for deferment in repayment of principal amount for one year for corporate, consumer, agriculture, SMEs and microfinance sectors, will now be available on financing of banks/ DFIs under SBP’s refinance schemes as well. With this deferment of principal, the complete repayment schedule/tenor of the loan will be extended by one year.

The borrowers will, however, continue servicing their mark up during the period of principal deferment. In case borrowers are not able to service mark-up payment, banks/DFIs may reschedule/restructure the loan in such a manner that tenor of the loan can go up to one year beyond the existing maximum tenor of the respective scheme.

Borrowers of SBP’s following refinance schemes and their Shariah alternatives would benefit from this relaxation:

•    Long Term Financing Facility (LTFF)
•    Financing Facility for Storage of Agricultural Produce (FFSAP)
•    Refinance Facility for Modernization of SMEs
•    Refinance and Credit Guarantee Scheme for Women Entrepreneurs
•    Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises
•    Small Enterprise (SE) Financing and Credit Guarantee Scheme for Special Persons
    

Press Release

 

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