Pakistan on track to receive $32B remittances

[Pak Nationalist]

This where attracting FDI to speed up import substitution should come in.

Pakistan Imports By Category

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With demand for non-Russian gas potentially increasing, getting the TAP (Formerly TAPI) pipeline up and running should be supported.

Pakistan should also formulate a business model that will support modernization of the steel mills through FDI.

But in the end this will have limited success (as imports will grow with population increase and consumption demand)

export growth through attracting FDI to enable modernization is the only way to get out of this constant deficit and underemployment.

The rate of TAPI gas is far more expensive than the long-term LNG contacts we have with our partners. That is why we are trying to renegotiate the rate citing a lack of incentive for us to go through with this deal. I think import substitution can take a back seat. I was of the opinion that import substitution is paramount but there is empirical evidence that investors use our protectionist policies in protected sectors to set up shop here and never bother scaling up to begin exporting which is a more tedious task, the field has a lot of competition, requires adhering to global standards, R&D, offshore marketing, overcoming logistical challenges, etc. We have to begin attracting investment that increases our exportable surpluses. Like the majority of people in this country came to the realization that without rapid revenue generation potential of the state there could be no economic salvation, many people are coming to this realization now that we are simply not producing enough to sell to the world. Export-driven growth will be the only variety o growth that would be sustainable in Pakistan. All other types of growth would be short-lived and jack up consumption, thereby driving up the import bill. Attract investment that sets up manufactury here and then exports. That's salvation.

 

[Patriot forever]

The rate of TAPI gas is far more expensive than the long-term LNG contacts we have with our partners. That is why we are trying to renegotiate the rate citing a lack of incentive for us to go through with this deal. I think import substitution can take a back seat. I was of the opinion that import substitution is paramount but there is empirical evidence that investors use our protectionist policies in protected sectors to set up shop here and never bother scaling up to begin exporting which is a more tedious task, requires adhering to global standards, R&D, offshore marketing, overcoming logistical challenges, etc. We have to begin attracting investment that increases our exportable surpluses. Like the majority of people in this country came to the realization that without rapid revenue generation potential of the state there could be no economic salvation, many people are coming to this realization now that we are simply not producing enough to sell to the world. Export-driven growth will be the only variety o growth that would be sustainable in Pakistan. All other types of growth would be short-lived and jack up consumption, thereby driving up the import bill. Attract investment that sets up manufactury here and then exports. That's salvation.

Import substitution is paramount.

1) We import vast quantities of finished value added products like petrol and diesel. These can be substituted by upgrading our refineries, which is already underway in 2 major refineries. This will save us a lot of forex.

2) Petro chemicals like the recent engro project will considerably reduce our import bill in this sector.

3) Using indigenous resources like thar coal, hydro for electricity generation will significantly reduce our import bill and reliance on Rlng and imported coal.

4) Cell phone local assembly will shave off 10-20% of import bill under this category.

Above are just few examples. Import substitution along with export growth comes with industrialization

From, cheeses to milk powder to chocolates, from chemicals to pesticides to DAP.

The major problem with our economy today is due to over reliance on imports in every sector and exports not growing.

Aslong as exports are growing and industrialization is happening we are in the right path, there is no other alternate to it.

The consequences of deviating from this path are severe, like when talking about currency no one points out why our REER value of currency goes down ( the reason is SBP printing and anaemic foreign inflows against outflows).
One wants to slow down devaluation (rate of devaluation and bring it to a level in India / Bangladesh) to make imported goods like petrol cheaper for the common man in local currency, increase inflows to match outflows and stop increasing money supply, than only one can control inflation without deindustrialization and destroying inflows.

India does not have crude but petro chemicals make a huge portion of its exports. Bangladesh does not have cotton neither gas but major portion of its exports are textiles.

 

[Pak Nationalist]

Import substitution is paramount.

1) We import vast quantities of finished value added products like petrol and diesel. These can be substituted by upgrading our refineries, which is already underway in 2 major refineries. This will save us a lot of forex.

2) Petro chemicals like the recent engro project will considerably reduce our import bill in this sector.

3) Using indigenous resources like thar coal, hydro for electricity generation will significantly reduce our import bill and reliance on Rlng and imported coal.

4) Cell phone local assembly will shave off 10-20% of import bill under this category.

Above are just few examples. Import substitution along with export growth comes with industrialization

From, cheeses to milk powder to chocolates, from chemicals to pesticides to DAP.

The major problem with our economy today is due to over reliance on imports in every sector and exports not growing.

Aslong as exports are growing and industrialization is happening we are in the right path, there is no other alternate to it.

The consequences of deviating from this path are severe, like when talking about currency no one points out why our REER value of currency goes down ( the reason is SBP printing and anaemic foreign inflows against outflows).
One wants to slow down devaluation (rate of devaluation and bring it to a level in India / Bangladesh) to make imported goods like petrol cheaper for the common man in local currency, increase inflows to match outflows and stop increasing money supply, than only one can control inflation without deindustrialization and destroying inflows.

India does not have crude but petro chemicals make a huge portion of its exports. Bangladesh does not have cotton neither gas but major portion of its exports are textiles.

Refineries are running at 60% capacity. That is why you are having to import petrol. I have narrated the story of why these are running at 60% efficiency.

 

[Patriot forever]

Refineries are running at 60% capacity. That is why you are having to import petrol. I have narrated the story of why these are running at 60% efficiency.

I didn't see your post so my guess is you are referring to furnace oil buildup? That was for just for a couple of weeks now there is no bottleneck at present.

A little more specific in the point you are raising?

We have always imported finished product petrol and diesel.
Currently our refineries end up with a lot of FO as a byproduct which when recent undergoing upgrade is complete will increase petrol and diesel production rather than FO.

 

[Pak Nationalist]

I didn't see your post so my guess is you are referring to furnace oil buildup? That was for just for a couple of weeks now there is no bottleneck at present.

A little more specific in the point you are raising?

We have always imported finished product petrol and diesel.
Currently our refineries end up with a lot of FO as a byproduct which when recent undergoing upgrade is complete will increase petrol and diesel production rather than FO.

Yes, it was due to furnace oil inventories building up. The refineries were threatening to shut till last week. I do not know what the situation is currently.

 

[Flight of falcon]

Apparently we have too much oil in hand …..

Pakistan ponders fuel oil exports amid problem of plenty at home

Pakistan's inventories of fuel oil are overflowing due to a lack of buying interest from state run and private electricity producers, prompting some of its refiners to consider exports, but analysts t

www.spglobal.com

 

[Patriot forever]

Yes, it was due to furnace oil inventories building up. The refineries were threatening to shut till last week. I do not know what the situation is currently.

Was resolved a month or so ago after refineries agreed to offer FO at a discount . Just KE is lifting 2k tons per day.
FO is currently cheaper than spot RLNG and more so after discount offered by refineries.

 

[Pak Nationalist]

Was resolved a month or so ago after refineries agreed to offer FO at a discount . Just KE is lifting 2k tons per day.
FO is currently cheaper than spot RLNG and more so after discount offered by refineries.

Any idea at what efficiency the refineries are operating since then? There should be a reduction in the refined oil imports if the issue stands addressed, or is it that getting rid of all the inventory build-up would consume time?

 

[Patriot forever]

Any idea at what efficiency the refineries are operating since then? There should be a reduction in the refined oil imports if the issue stands addressed, or is it that getting rid of all the inventory build-up would consume time?

Refineries operate at optimum capacity. Regarding this news there was more hype than actual impact.

Inventory does not go to zero. There are always stocks of FO, diesel and petrol in the country. Right now there the inventory is on a decline.

Our refineries can not completely refine crude to petrol/ diesel and produce FO as a byproduct which the government has to buy and use for power generation. Overall producing less quantity of petrol/diesel per barrel which in turn also increases the cost.
We have to buy these value added products from abroad which comes at a cost premium to Arab light.

This will give one a better idea about the scale of value added products we import. Compare petroleum crude vs petroleum products ( includes petrol/diesel etc) we import.

 

[Pak Nationalist]

Refineries operate at optimum capacity. Regarding this news there was more hype than actual impact.

Inventory does not go to zero. There are always stocks of FO, diesel and petrol in the country. Right now there the inventory is on a decline.

This will get one a better idea about the scale of value added products we import.


View attachment 814053

It has started declining.

 

[Patriot forever]

It has started declining.

Current FO demand is projected at 160k + tons. Most likely our long term RLNG cargoes will again default (except Qatar) which will further increase the demand of FO as replacing them with spot is not an option in the prevailing market conditions.

I am not so sure but I think inventory peaked around 200k tons but with the current level of offtake there is no crisis.

If incase offtake for power decreases (unlikely IMO) they can export it, we have exported FO before as well.

 

[Pak Nationalist]

Current FO demand is projected at 160k + tons. Most likely our long term RLNG cargoes will again default (except Qatar) which will further increase the demand of FO as replacing them with spot is not an option in the prevailing market conditions.

I am not so sure but I think inventory peaked around 200k tons but with the current level of offtake there is no crisis.

If incase offtake for power decreases (unlikely IMO) they can export it, we have exported FO before as well.

Exporting was the problem. There are a limited number of tanker ships available and there is port congestion.

 

[Patriot forever]

Exporting was the problem. There are a limited number of tanker ships available and there is port congestion.

That can be case for over 2 months now.
IMO the major problem with exporting is they won't get the same money as they can off government.

When suddenly something is forced in the media with such intensity one needs to look who is lobbying and to what end.

Overall the refineries want the government to generate (I forgot the number) of electricity on FO for a period and not completely stop FO off take (our energy mix is changing) until the refineries upgrade cycle is complete ( which is already underway or started in some major refineries).

 

[CodeforFood]

+ @peagle and others.

Makhdoom Shahabuddin said in a video several weeks ago that China has offered to take up the 'entire $120 billion of Pakistan's foreign debt' in case Pakistan is pushed to a corner. We can't be sure of the veracity of that claim but the guy was spot on with some apparent inside connections in Pakistan's security establishment in the summer of 2021 especially about the events in Afghanistan.
If this were to be a true claim then China wouldn't just 'give' this money to Pakistan. China would be assuming loans for which Pakistan would pay interest and for which Pakistan would have to presumably compromise in one way or another to some Chinese demands.
I, for one, think there is at least some truth in the claim. I believe Pakistan has been conveying to Washington that Pakistan is not going to join any 'block' but neither would Pakistan betray its friendship with China at any cost. And I also think Pakistan's recent show of backbone to Washington is based on some very likely Chinese financial support commitments. And I also think Washington knows that just like China would block any anti-Pakistan UNSC Resolutions, China would step up to help Pakistan should it come to that. China is flushed with cash and while it would PREFER not to tie down so much cash on Pakistan, it would do so if forced to. United States wouldn't want to lose Pakistan for no gain for Washington! I see the chatter in American media about Pakistan--which is often used to publicly pressure Pakistan--is far less now. Even the blame for the Afghanistan debacle is not put on Pakistan much. These are pointers to the security establishment in America.

Now, don't shoot me down. I am merely conveying what a so-far reliable vlogger has said and from what my own understanding of the rapidly evolving transformations of the regional situation. And if you saw Shehkar Gupta video from today at The Print, you would find more support in coming to such conclusion.

This will be detrimental. We will be owned by one country at that point. This may look rosy now. It won't be in long term.

 

[Mav3rick]

Problem was never Zardari / Nawaz. It was always their supporters
@Tameem @Mav3rick @muhammadhafeezmalik

You still don't realize that people who see through the Bullshit of Imran Khan and his cronies are not necessarily PPP/PML supporters. Most of us are just fed of of the lies and the rape of economy in the last 3.5 years. The change of the Finance Ministers & Secretaries, the begging IMF for a mere 1 Billion USD in the 4th year of Governance is proof which none of your graphs can trump. Perhaps in the first year we could have considered your nonsense but not in the 4th year when the economy is worse than what it was in the first year! The graph is continuously growing down!