Germany steps up calls to save energy as Russia reduces gas

Russian energy giant Gazprom’s announcement that it would reduce supplies of natural gas via the Nord Stream pipeline was a “political decision,” Germany’s economy minister said Wednesday. (AFP)
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Updated 16 June 2022

Germany steps up calls to save energy as Russia reduces gas

  • State-owned Gazprom announced on Tuesday that it was cutting gas flows through the undersea Nord Stream 1 pipeline to Germany by 40%
  • Then, a day later, announced a further cut that brings the overall reduction to about 60%

BERLIN: Germany’s vice chancellor is stepping up an appeal for the country’s residents to save energy after Russia’s Gazprom announced significant cuts in natural gas deliveries through a key pipeline.
State-owned Gazprom announced on Tuesday that it was cutting gas flows through the undersea Nord Stream 1 pipeline to Germany by 40 percent, then, a day later, announced a further cut that brings the overall reduction to about 60 percent.
In both cases, it cited a technical problem, saying that Canadian sanctions over the war in Ukraine prevented German partner Siemens Energy from delivering equipment that had been sent for overhaul. The German government rejected that reasoning, saying that maintenance shouldn’t have been an issue until the fall and the Russian decision was a political gambit to sow uncertainty and push up prices.
Russian President Vladimir Putin “is doing what was to be feared from the beginning: He is reducing the volume of gas, not in one go but step by step,” German Vice Chancellor Robert Habeck said in a video posted by his ministry on Twitter Wednesday night. He pointed to earlier Russian moves to cut supplies to Bulgaria, Denmark and others.
The reduction in gas flows comes as Germany and the rest of Europe try to reduce their dependence on Russian energy imports. Germany, which has Europe’s biggest economy, gets about 35 percent of its gas to power industry and generate electricity from Russia.
The German gas regulator confirmed on Thursday that gas flows through Nord Stream 1 had fallen to about 40 percent of capacity. But it said it could not confirm that the reduction was caused by the technical problem Russia cited, the shutdown of a turbine at a gas compressor station.
The Federal Network Agency of Germany said it had no concerns about German gas supplies, saying storage facilities were significantly fuller than in previous years.
The news of the reductions sent short-term natural gas prices sharply higher in Europe. Month-ahead spot prices rose 13 percent Thursday to 139.10 euros per kilowatt hour, up 40 percent since Monday.
Habeck, who is also the economy minister, already had launched a campaign for people to save energy last week. After the Gazprom announcements, he hammered home the message in Wednesday night’s video.
“Gas is coming to Europe — we have no supply problem, but the volumes of gas must be acquired on the market and it will get more expensive,” Habeck said. He said the government is prepared, and noted that it has enacted legislation requiring gas storage to be filled.
He lauded the willingness of Germans and business to save energy and store gas.
“Now is the time to do so,” he said. “Every kilowatt hour helps in this situation. It is a situation that is serious, but not a situation that endangers supply security in Germany.”

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Pak-Iran Pishin border market likely to open next month — commerce minister

Updated 16 September 2022

Pak-Iran Pishin border market likely to open next month — commerce minister

  • Naveed Qamar says the two countries have mutually approved nine out of 12 border markets to enhance trade
  • He informs the two sides will trade with each other through these border markets by using the barter system

ISLAMABAD: Pakistan’s commerce minister Syed Naveed Qamar said on Thursday a border market on his country’s frontier with Iran was expected to be inaugurated in the coming month while hoping it would further strengthen trade relations between the two neighboring states.

The minister issued the statement while holding a meeting with an Iranian parliamentary delegation at his office in Islamabad.

He added that a total of 12 border markets had been proposed by the two countries to increase the volume of bilateral trade, out of which nine had been mutually approved.

Qamar informed trade would take place in these border markets under the barter system.

“Federal Minister for Commerce Syed Naveed Qamar on Thursday said that the opening of Pakistan-Iran ‘Pishin Border Market’ is expected in the coming month, which will increase the trend of free trade between the two countries,” the commerce ministry said in a statement.

The minister maintained there was dire need to increase the trade volume in petroleum and gas, which would also augment mutual trade volume between the two countries.

“We are importing Liquified Petroleum Gas from Iran and its import also needs to be increased,” he said. “There is also a need to increase its production in Pakistan.”

Qamar also said Pakistan should step up its import of electricity from Iran to meet growing demand in Gwadar.

The head of the Iranian delegation, Malek Fazeli, said Pakistan and Iran shared 920-kilometer-long border which helped bilateral trade and movement of people throughout the year.

He said that as a member of the Iranian parliament, he considered cooperation between the two countries in the field of energy essential, adding that work on the Iran-Pakistan gas pipeline should also be completed in soon.

Fazeli maintained his country was willing to fully cooperate with Pakistan to ensure the rehabilitation of flood-affected families in Sindh and Balochistan provinces.


After bailout deal, experts urge asking IMF for fiscal space as floods ravage Pakistan

Updated 25 September 2022

After bailout deal, experts urge asking IMF for fiscal space as floods ravage Pakistan

  • The international lending agency approved an immediate disbursement of $1.1 billion to Pakistan on Monday
  • Experts say the government should seek financial concessions to spend more on rescue and relief activities

KARACHI: Pakistan’s financial experts said on Tuesday the government should discuss the recent floods and their impact with the International Monetary Fund (IMF) to create fiscal space for itself to spend on relief and rehabilitation activities after the global lender approved an immediate disbursement of $1.1 billion to the country.

The IMF decision was taken in an executive board meeting in Washington on Monday, bringing its financial assistance to Pakistan under a bailout package signed in 2019 to about $3.9 billion.

The revival of the loan program has come at a time when Pakistan is witnessing its worst floods triggered by torrential monsoon rains that have killed over 1,100 people and destroyed large infrastructure and farmlands.

“It is important to ask the IMF for an adjuster to be able to spend on rescue and relief efforts in the wake of the floods,” Dr. Khaqan Najeeb, a former adviser to the ministry of finance, told Arab News. “Pakistan can also seek some money under the rapid financing instrument available with the fund which we also tapped previously [during the COVID-19 pandemic].”

“The IMF is the best anchor for Pakistan, considering the country’s balance of payment challenges and the uncomfortable position of $7.8 billion in the central bank’s reserves which can barely cover over a month of imports,” he continued.

The delayed IMF approval resulted in disorderly movements in Pakistan’s currency and stock markets.

“We can hope that the revival of the IMF program will give confidence to the jittery markets and that the worst dollar credit crunch that Pakistan faced over the last couple of months is now over,” Najeeb said.

Pakistan’s stock market, which recently displayed a bearish trend, gained more than 400 points after opening on Tuesday. The rupee also appreciated against the dollar in the early trade.

“All eyes are now on global oil prices and local political situation,” Muhammad Sohail, chief executive officer of Toplines Securities, told Arab News.

“We believe that after the IMF endorsement, more dollar funding for Pakistan is likely from bilateral and multilateral agencies along with other sources which will support the foreign exchange reserves,” he continued. “This will also bring stability to the national currency which had recently been under pressure due to uncertainty surrounding the IMF program, especially after the differences between federal and provincial administrations.”

The IMF acknowledged on Monday that Pakistan was at a difficult economic juncture, though it continued to insist on the implementation of tough structural reforms.

“Accelerating structural reforms to strengthen governance, including of state-owned enterprises, and improve the business environment would support sustainable growth,” Antoinette Sayeh, deputy managing director and acting chair of the lending agency, said in statement.

“Reforms that create a fair-and-level playing field for business, investment, and trade necessary for job creation and the development of a strong private sector are essential,” she added.


Pakistan central bank holds rates at 15%, to closely watch inflation

Updated 22 August 2022

Pakistan central bank holds rates at 15%, to closely watch inflation

  • The decision came after the bank hiked rates by 125 basis points at its previous policy meeting in July
  • Pakistan is in economic turmoil with fast-depleting foreign reserves, historic depreciation of the rupee

KARACHI: Pakistan’s central bank on Monday held its main policy rate at 15 percent, the bank said in a statement, adding it would closely watch inflation data and global commodity prices.

“Looking ahead, the MPC (monetary policy committee) intends to remain data-dependent, paying close attention to month-on-month inflation ... as well as global commodity prices and interest rate decisions by major central banks,” the State Bank said in a statement.

The decision, which was largely in line with analysts’ expectations, came after the bank hiked rates by 125 basis points at its previous policy meeting in July as the country experienced surging inflation.

Pakistan is in economic turmoil with fast-depleting foreign reserves, a historic depreciation of the rupee against the US dollar and soaring inflation.

The decision comes ahead of a crucial meeting by the International Monetary Fund (IMF) in Washington next week, at which the bank said it was expected to approve a $1.2 billion tranche of lending.

Pakistan’s annual consumer price inflation reached 24.9 percent in July, the highest in 14 years, according to its statistics bureau.

Still, the bank said there were signs that inflationary demand pressures were easing, which justified holding rates steady.

“With recent inflation developments in line with expectations, domestic demand beginning to moderate and the external position showing some improvement, the MPC felt that it was prudent to take a pause at this stage,” the bank said.

It projected headline inflation would peak in the first quarter of the fiscal year — which began in July — before gradually declining through the rest of the year.

The bank also welcomed expected fiscal consolidation to around 3 percent of gross domestic product.

“It envisages a strong fiscal consolidation ... which is appropriate to cool the economy and ensure a reduction in inflation and the current account deficit,” it said.

To help achieve this result and reduce the country’s import bill, it expected government measures to promote markets closing early, reduce electricity use, and to encourage remote work from home and car pooling.

Fiscal consolidation has been a key demand of the IMF. Pakistan’s last loan disbursement from the fund was in February and the next tranche was to follow a review in March, but the government of ousted prime minister Imran Khan introduced costly fuel price caps which threw fiscal targets and the program off track.


Analysts call Pakistan’s currency, stocks international ‘top performers’ in August

Updated 15 August 2022

Analysts call Pakistan’s currency, stocks international ‘top performers’ in August

  • Stocks surge by 22 percent while rupee appreciated by 11 percent since the beginning of this month
  • The change in market sentiment owes to expected revival of IMF program, financing from other nations

KARACHI: Local traders and analysts on Monday described Pakistan’s currency and stocks as global ‘top performers,’ saying they had recovered much of their value since the beginning of August after months of depressed trading against the backdrop of political and economic uncertainty in the country.

Pakistan’s main stock index rose by 764.25 points to close at 43,621 while the currency appreciated by 0.71 percent to close at Rs 213.98 against the US dollar in the interbank market on Monday.

The stocks and the Pakistani rupee have appreciated by 22 and 11 percent, respectively, during the ongoing month in a consistently bullish spell.

“After months of economic and political uncertainty, the rupee and stock market have emerged as top performers in August so far, beating all other countries,” Muhammad Sohail, chief executive officer of Topline Securities, a Karachi-based brokerage firm, said while referring to Bloomberg data. “The rupee is up 11 percent while KSE100 Index has surged by 22 percent in dollar terms.”

The rupee has appreciated by 11.58 percent, or Rs25.97, against the greenback in the last ten trading sessions that remained bullish.

Prior to that, Pakistan’s national currency lost its value by 17.51 percent since January due to economic concerns related to the revival of the support program of the International Monetary Fund (IMF) and the political situation that led to the ouster of former prime Minister Imran Khan in April.

The recent appreciation of the rupee is mainly due to the revival of the IMF program after Pakistani authorities and officials of the global lending agency reached a staff-level agreement for the seventh and eighth review of the loan program on July 13.

The agreement has paved the way for the disbursement of $1.2 billion by the IMF at the end of August after the approval of its executive board.

Pakistan is also expected to get some financial assistance from friendly countries, including Saudi Arabia and the United Arab Emirates (UAE), which is desperately required to bridge the financing gap recently mentioned by senior IMF officials.

These developments have also had a positive impact on the country’s equity market which had a bullish close on Monday, said analysts.

“The bullish market sentiment owes to the strengthening of the national currency along with the IMF’s letter of intent for the revival of the bailout program,” Ahsan Mehanti, chief executive officer of Arif Habib Corporation, said. “Reports of additional financial support from Saudi Arabia after the finance minister hinted at $1 billion UAE investment through Pakistan Stock Exchange [PSX] have also helped the situation.”

He added that other factors that benefitted the market included a positive sentiment in global equities and renewed foreign interest in PSX ahead of the IMF bailout receipt expected this month.

Pakistani analysts expect the rupee to stabilize between Rs200 and Rs210 against the US dollar.

“The Pakistani rupee was undervalued against the greenback which is expected to stabilize at around Rs210 after recent prospects of inflows from the IMF and friendly countries,” Samiullah Tariq, director research at the Pakistan-Kuwait Investment Company, told Arab News.

However, currency dealers said the rupee was likely to find support somewhere around Rs200 after the revival of the IMF program and expected import cuts.

“The rupee was depreciating due to the uncertainties surrounding the IMF program, though the fundamentals were sound and now the national currency is appreciating on mere promises since we have not received the funds so far,” Zafar Sultan Paracha, general secretary of the Exchange Companies Association of Pakistan (ECAP), said.

“The pressure on the Pak rupee will further ease off in the coming days due to the reduction in global commodity prices, including oil and other energy products along with freight cost cuts,” he added.

Fitch Ratings in its latest Economics Dashboard released on Monday said global supply chain disruptions were beginning to unwind as shipping rates were gradually declining while the time taken to deliver goods was also falling quickly.

It added that port congestion had eased and the backlog of orders was getting cleared, raising the prospect of lower core goods inflation ahead.

“The cost of shipping freight has declined by as much as 70 percent on some routes since September 2021 while transporting cargo now takes around 90 days instead of 122 days in April 2022,” the international rating agency said. “Congestion at US ports has dropped significantly, falling by close to 80 percent since last November.”


With Pakistan among top buyers, Dubai real estate sales surge 60%

Updated 29 July 2022

With Pakistan among top buyers, Dubai real estate sales surge 60%

  • Russians among top five buyers as emirate benefits from influx of wealth in wake of Western sanctions
  • Top buyers were from India, UK, Italy, Russia and France, Canada, UAE, Pakistan and Egypt

DUBAI: Dubai’s red-hot property market surged in the first half of the year as investors piled in, while Russians were among the top five buyers as the emirate benefits from an influx of wealth in the wake of Western sanctions.

The first half saw residential real estate transaction volumes up 60 percent with an 85 percent rise in the value of property sold, property consultancy Betterhomes said in a report.

The top buyers were from India, the United Kingdom, Italy, Russia and France, in that order, followed by Canada, the United Arab Emirates, Pakistan and Egypt tied in eighth place, Lebanon and China.

Demand was boosted by geopolitical instability in Europe and mortgage buyers looking to get in ahead of well-telegraphed interest rate hikes as central banks tackle inflation, Betterhomes said.

Reuters reported earlier this year that Russians were pouring money into Dubai real estate as they seek a financial haven in the wake of Western sanctions on Moscow over its invasion of Ukraine.

“The market has faced growing headwinds in the form of rising interest rates and a strengthening dollar, but has so far proven to be robust with little sign of slowing,” Betterhomes said.

In the first half of the year, a record 37,762 units were sold, it said, citing Dubai Land Department data. Total transactions in the residential property market amounted to nearly 89 billion dirhams ($24.23 billion), it added.

Dubai’s property market began recovering from 2020’s severe downturn early last year with buyers snapping up luxury units as the emirate eased pandemic restrictions faster than most cities around the world.