Last update: Fri, 20 Jan 2017 11pm

BR Research: All


The National Electric and Power Regulatory Authority (NEPRA) have published a draft of the proposed competitive bidding regulations for public consultation and stakeholder feedback. Last week this column commented upon the gaps contained in the previous regulations pertaining to competitive bidding. It also highlighted the objectives the regulator was trying to achieve with the revision including encouragement of investment by the private sector as well as inducing competition in the electricity market of Pakistan.
A subject of this column quite often has been the division of the textile industry and how different links in the value chain are pitted against each other. In recent days, however, this fracture has deepened and taken a new dimension - provincial competition.
Growth in cement sector is already seeing a remarkable pattern-on average, cement dispatches are growing by 10 percent since the fiscal year kicked off; local dispatches grew by 12 percent year-on-year despite a slow slide down of exports to Afghanistan and South African markets. Already 22 million tons of expansions are in the works (some brownfield, some greenfield) that are meant to come online through the next five years taking up the capacity to 68 million tons.
What is the new normal for oil prices? Consensus says it is around $50-60 per barrel. Not very long ago the consensus had it at no more than $40/bbl. Ever since the Opec and non-Opec members agreed to cut production to lower levels, oil prices have been seen rising. They touched 18-month high before coming down slightly this week.
Less than two months after Modis decision to shake up its currency, no less than three countries have started thinking along the same lines. Earlier this month (December 11), Venezuela, whose inflation rate is nearly 500 percent, decided to demonetise its biggest denomination. A few days later (December 14), Australias finance minister said his office is considering banning the countrys biggest denomination to tackle its shadow economy. In Pakistan, the Senate has also passed a resolution to scrap the countrys biggest denomination (Rs5000).
The current account has slipped significantly in November to cause worry to policymakers. The deficit alone in November is $839 million - its the worst monthly deficit since September 2011. The CAD for 5MFY17 stood at $2.6 billion (2.0% of GDP).
A significant shift in paradigm is taking place in the power sector in Pakistan with the move towards competitive bidding for power projects now becoming a reality. There had been much criticism from various stakeholders including the government itself that the currently used upfront tariff mechanism resulted in disproportionately higher tariffs being awarded.