Pakistan: Time to oppose deep sea fishing

Local fishermen have always opposed operation of deep sea fishing trawlers in the exclusive economic zone (EEZ). However, the unlawful activity goes own because certain quarters in the government are more than keen in making small personal gains and depriving the country from the catch as well as huge foreign exchange that could be earned from export of this catch.

According to a Dawn report the federal government has invited applications for issuance of licences to deep-sea fishing trawlers for operating in the exclusive economic zone (EEZ).  Marine Fisheries Department (MFD) plans to issue 100 licences for various fishing vessels in the EEZ between 20-200 nautical miles.

According to the break up, the government aims to issue 25 licences for Tuna Longliners fishing vessels of up to 350 gross tonnage (GT), followed by 25 licences for Tuna Longliners from 351-1,000 GT. MFD will issue 30 licences Stern Trawlers (Single Boat Pelagic/Midwater Trawling) up to 350 GT, 15 licences for Squid Jiggers up to 350 GT and five licences for Tuna Purse Seiners up to 700 GT.

There is need to strongly oppose the move, especially because MFD and Food and Agriculture Organization (FAO)  has already undertaken a project called ‘Fishing Resources Assessment Project’ which warned of depleting fish stocks. Reportedly fish and shrimp landings have already reduced to 40 per cent as compared to above 90 percent three years ago. It is feared that if these trawlers are allowed fishing in Pakistan’s territorial waters then the stocks would further deplete.

MFD and Korangi Fisheries Harbour Authority (KFHA) have jointly defended the decision saying the Korangi Fish Harbour was primarily developed to promote deep-sea fishing beyond territorial waters (from 12 up to 200 nautical miles referred as EEZ, the water area measuring about 240,000 square kilometre) which falls under the federal jurisdiction. To protect the interest of local fishermen, a buffer zone from 12 to 20 nautical miles has been created where no foreign fishing vessel under joint venture with Pakistani nationals can operate.

Pakistan Fisherfolk Forum (PFF) staged sit-in against issuance of licences to foreign deep sea fishing trawlers in front of Korangi Fisheries Harbour. Chairman PFF Mohammad Ali Shah said the fish stock has already shrunk due to over fishing and increasing marine pollution and these deep sea trawlers would further cause destruction.

                                                                                                                                                       

Coupon rate for the 3-Year Government of Pakistan Ijara Sukuk

State Bank of Pakistan (SBP) has announced1st Rental coupon rate for the 3-Year Government of Pakistan Ijara Sukuk GIS-16 (auction conducted on December 15, 2015) on Friday 18^th December 2015. The first rental coupon rate is 5.8946 percent and payment date is 18^th June 2016.

Is India Secular?

Without digging too deep into the history of Hindustan, it may be said very conveniently that the rulers have always been hiding their real face behind two strong veils i.e. democracy and secularism. Both these terms have been used to deceive the international community. If one probes the events taking place with the beginning of the division of the subcontinent into Pakistan and Hindustan and particularly over the last two decades, it becomes evident that democracy is a hoax and secularism is the name given to vandalism.
To read details visit http://southasia.com.pk/cs-3.html

Pakistan Ijara Sukuk: Rs 117.723 billion bids accepted

Pakistan Ijara Sukuk: Rs 117.723 billion bids accepted

 

In response to tender for the auction of Rs100 billion Government of Pakistan Ijara Sukuk, bids received amounted Rs273.3 billion but the State Bank of Pakistan accepted Bids worth Rs117.7 billion leaving ample liquidity in the market

 

Tender for Sale of 3-Year Government of Pakistan Ijara Sukuk was invited by the State Bank of Pakistan, Karachi through designated Primary Dealers (for Ijara Sukuk) on December 15, 2015. Bids were opened at 11:30 hours on December 15, 2013, which were received as follows:

                                                                                                              

                                                                                                                   (Rs. In Millions)

	Offered Amount (FACE VALUE)	RANGE OF MARGIN over Benchmark (bps)
03-Year Ijara Sukuk	273,303.00	-180.00 to +25.00
Total	273,303.00

 

Out of the above bids, the accepted bids are as under:

 

Maturity Period	Cut-Off Margin Over benchmark (bps)*	Accepted Amount (Face Value)
03 -Yr Ijara Sukuk	Minus 50.00	117,723.00
Total		117,723.00

* This cut-off margin will be applicable to all accepted bids.

 

 

Pakistan announces date for US$ one billion Sukuk auction

Pakistan’s central bank has announced date for the auction of 3-Year Government of Pakistan Ijara Sukuk (GIS). Interested primary dealers have been invited by the Director, Domestic Markets & Monetary Management Department (DMMD), State Bank of Pakistan, Karachi to submit the bids in accordance with the provisions of DMMD circular No.21 dated 09^th December, 2015, already placed on the website of State Bank of Pakistan.

Maximum value of the asset under the present issuance program of the Ijara Sukuk is Rs.315.083 billion and bids can be rejected without by the central bank without assigning any reason.

 

 

 

 

 

 

 

1. Receipt of Tenders             Up to the date of auction (11:15 hrs)
2. Opening of tenders             11:30 hours on the date of auction
3. Communication of result     On the date of auction
4. 1^st Rental Coupon               To be determined one day prior to the settlement date

 

 

 

 

 

Impact of low oil prices on Pakistan

In its latest meeting OPEC decided to maintain its oil output. This has triggered another slide in global crude oil prices. There are growing expectations that prices may remain low for longer than expected period.

One of Pakistan’s leading brokerages houses has analyzed possible implications of lower oil prices on the local stock market under three oil price assumptions of Arabian Light crude (WTI and Brent are less related to Pakistan as the country buys crude mainly from the Middle eastern countries. The brokerage house has based its analysis on three assumptions: 1) US$35/bbl, 2) US$40/bbl and 3) US$45/bbl) against its base case of US$50/bbl.

Remaining a key positive on the macro front, significant improvements are expected on 1) the BoP position on lower oil imports and 2) controlled inflation opening up room for continued monetary easing.

However, from the market's perspective this scenario will be a drag on index heavyweight Oil & Gas sector. Additionally, lower interest rates will continue weighing on banking sector's performance, however boding well for leveraged plays and high dividend plays.

Pakistan continues to benefit from lower oil prices, where another slide in the commodity's price holds positive implications for the country. Sensitivity analysis undertaken by the brokerage house indicates that with US$5/bbl reduction in CY16 will result in additional import bill savings of US$8 million/annum where oil averaging below US$45/bbl could comfortably lead to current account surplus for FY16.

Besides helping to sustain recent improvements in the BoP position, lower oil prices also have trickle down benefits on inflation, which can sustain at current levels (2.5%YoY average in CY15) across the medium term. With lower fuel costs and indirect impact on food, the sensitivity analysis indicates CY16 CPI average can hover in the range of 2.8% to 4.2%YoY.

A downwards trend in oil prices can effectively counter the low-base effect on CPI numbers, unlocking room for further monetary easing. While room could exist for a rate cut at US$45/bbl average. It is expected that the central bank may remain cautious with potential and discount rate may hover around at 5.5% at the lower extreme.

Pulled lower by falling global oil prices, Oil & Gas companies have experienced broad based selling (down 33%CYTD). E&Ps suffer from hampered profitability with POL being the most affected on account of high oil price partiality (53% of revenues in FY15). That said, the gas heavy (80%+ of overall production, 1,173mmcfd in FY14) OGDC continues to persevere in the E&P sector as its profitability is the least hurt by tumbling oil prices. Volatility in oil prices and its consequent impact on the interest rate cycle is likely to have negative implications for banking sector's profitability.

For the Big-6 banks, this is most likely to reduce CY16 earnings by 5%-18% assuming the worst case scenario. However, factors such as potential increase in the capital gains backlog and any uptick in private sector credit growth are expected to provide support to bottom-line should the interest rates come down further. In this backdrop, banks with a higher CASA ratio, greater concentration towards high margin consumer/SME segments, and higher PIB/investment ratio are expected to fare better than the rest. 

While Oil & Gas and Banks are likely to bear the brunt in case of lower oil prices and continued monetary easing, brokerage house sees cost side benefits trickling down to sectors with 1) high leverage sectors like Fertilizers, Cements and Telecom 2) higher fuel and energy costs sectors like Cements, Foods ,Shipping and Aviation.

Apart from these, Power sector is likely to benefit from reduced liquidity constraints amid lower cost of generation while a lower interest rate environment should keep the sector in limelight on account of attractive dividend yields.

Auction of Rs300 billion Ijara Sukuk to be held in last week of December

And finally State Bank of Pakistan (SBP) has announced auction of Government of Pakistan Ijara Sukuk (GIS-16) having Jinnah International Airport, Karachi as the underlying Asset.

Though, the size of auction was not announced the Government of Pakistan (GoP) is likely to mop up abut Rs 300 billion (around US$3 billion) through GIS-16.

There are twin objectives, top of the agenda being meeting the fiscal deficit and also facilitating Islamic financial institutions, particularly Islamic banks suffering from excessive liquidity problem.

GIS-16 will have a tenor of three years from the date of issue and Sukuk will be issued in multiple of one hundred thousand rupees. Profit on will be paid bi-annually on the basis of rental rate announced by the SBP prior to start of each half year.

Although SBP has not announced any auction date, the industry experts strongly believe that the auction will he held during last week of December 2015. Experts say the issue is already late by almost a month.

According to provisions of the notification of the GoP Ijara Sukuk Rules 2008 Islamic Banking Department of SBP will be responsible for monitoring of proper execution and the legal documentation.