Pakistan’s imports of Russian crude face port, refinery, currency constraints

Pakistan’s imports of Russian crude face port, refinery, currency constraints
Security personnel walk as a Russian cargo ship carrying crude oil docked at the Karachi port in Karachi on June 28, 2023. (AFP)
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Updated 31 July 2023
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Pakistan’s imports of Russian crude face port, refinery, currency constraints

Pakistan’s imports of Russian crude face port, refinery, currency constraints
  • Pakistan’s first cargo of Russian crude oil arrived in June while second is under negotiation
  • Transportation costs for Russian crude are higher than Middle Eastern crudes due to distance

KARACHI: Pakistan is unlikely to meet a target for Russian crude to make up two-thirds of its oil imports, despite attractive prices, hampered by a shortage of foreign currency and limitations at its refineries and ports, officials and analysts say.

The cash-strapped South Asian nation became Russia’s latest customer snapping up discounted crude that has been banned from European markets due to Russia’s war on Ukraine. Its first cargo arrived in June and a second is now under negotiation.

It is targeting 100,000 bpd of imports from Russia, compared with the total 154,000 bpd of crude it imported in 2022, in the hopes that will lower its import bill, address a foreign exchange crisis, and keep a lid on record high inflation.

However, the benefits are being offset by increased shipping costs and lower-quality refined products compared with the fuels produced with crude from Pakistan’s main suppliers, Saudi Arabia and the United Arab Emirates.

Pakistan will have to increase gasoline and gasoil imports to make up for the lower output of these fuels from the Russian crude, leading to more dollar outflows and stress on its crisis-hit economy, said Shahbaz Ashraf, chief investment officer at Pakistan-based FRIM Ventures.

While Islamabad and Moscow have not disclosed pricing details and the extent of discounts, a shortage of Chinese yuan currency to pay for Russian crude poses another hurdle, as it needs the yuan for trade with China, its top trade partner.

Pakistan paid for its first Russian crude cargo in Chinese yuan. However, Aadil Nakhoda, assistant professor at Karachi’s Institute of Business Administration, said it would be better for the country to use a barter deal with Russia than pay with yuan, which traders say is in short supply.

“How will it pay other lenders and how will it finance trade with China if it uses the low yuan reserves to pay for Russian oil?” Nakhoda said.

PORT, REFINERY CONSTRAINTS

Adding to the challenges, transportation costs for Russian crude are higher than for Middle Eastern crudes not only because of the longer distance traveled, but because Pakistan’s ports cannot handle the large vessels departing Russia.

Urals crude had to be transferred from a supertanker on to smaller ships, known as a lightering operation, in Oman before heading to Pakistan, government officials said, unlike direct shipments from the Middle East.

Even with that extra cost, it was worth importing Russian oil, said Viktor Katona, lead crude analyst at Kpler, as Saudi Arab Light crude is $10 to $11 per barrel more expensive for Pakistani refiners than Urals, while lightering operations add around $2 to $3 per barrel.

“Pakistani buyers would still be much better off,” he said.

However, Urals quality is a deterrent, as Pakistan’s refineries cannot get as much gasoline and diesel out of Urals crude as they produce from Saudi and UAE crudes.

It will take Pakistan Refinery Ltd. (PRL) at least two months to fully process its first cargo of 100,000 metric tons (730,000 barrels) of Urals crude as it needs to be blended with Middle East crude to offset the high output of fuel oil from the Russian oil, Zahid Mir, chief executive of the state-run refiner, told Reuters.

“Our optimum processing solution is to blend Urals with Middle Eastern imported crude while not exceeding 50 percent Ural in the blend,” Mir said.

The residual fuel produced from Urals crude has to be mixed with diesel and kerosene to meet specifications for local use while the remainder is exported, but the deal was still commercially viable for Pakistan, Mir said.

PRL has no plans to upgrade its refinery to process fuel oil into higher quality fuels, he added.

Kpler’s Katona expects Pakistan’s liquidity issues and technical challenges to weigh on its appetite for Russian crude.

“Russian imports into Pakistan will not grow into anything bigger than one cargo per month,” he said.


Pakistan PM calls for enhanced coordination with provinces for security in Muharram

Pakistan PM calls for enhanced coordination with provinces for security in Muharram
Updated 13 July 2024
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Pakistan PM calls for enhanced coordination with provinces for security in Muharram

Pakistan PM calls for enhanced coordination with provinces for security in Muharram
  • Ashura, 10th day of Islamic month of Muharram, is the holiest event in the Shia Muslim calendar
  • It commemorates the 7th century death of Imam Hussain and his companions in Battle of Karbala

ISLAMABAD: Prime Minister Shehbaz Sharif on Friday called on the country’s interior ministry to improve coordination with provinces as well as Gilgit-Baltistan and Azad Kashmir regions for security during the month of Muharram, Pakistan state media reported.
Pakistan has historically experienced sectarian violence during Muharram, a significant month for Shia Muslims who observe mourning rituals to commemorate the martyrdom of the Prophet Muhammad’s (PBUH) grandson in the Battle of Karbala.
Ashura, the 10th day of the Islamic month of Muharram, is the holiest event in the Shia Muslim calendar and sees hundreds of thousands of Shia Muslims take part in religious gatherings and processions to mourn the passing of Imam Hussain.
PM Sharif held a meeting with Interior Minister Mohsin Naqvi in Islamabad, wherein the two figures discussed the law and order situation during the holy month, the Radio Pakistan broadcaster reported.
“Prime Minister Shehbaz Sharif has instructed to further improve harmony and coordination with provinces, including Gilgit-Baltistan and Azad Kashmir over security matters during Muharram and especially on Ashura,” the report read.
Muharram processions and gatherings take place amid tight security in Pakistan as militant groups have often targeted them in the past and killed of hundreds of people in the South Asian country.
Pakistan’s interior ministry said this month it had not made any decision on requests by provinces to suspend Internet service to ensure security in Muharram.
Pakistan’s most populous Punjab province also proposed a ban on all social media platforms for six days due to security concerns regarding thousands of religious processions.


Pakistan reaches new $7 billion loan deal with IMF, says lender

Pakistan reaches new $7 billion loan deal with IMF, says lender
Updated 52 min 49 sec ago
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Pakistan reaches new $7 billion loan deal with IMF, says lender

Pakistan reaches new $7 billion loan deal with IMF, says lender
  • The new loan deal, which will last for 37 months, is aimed at strengthening fiscal and monetary policy as well as reforms
  • The program aims to capitalize on the hard-won macroeconomic stability achieved over the past year, says IMF’s mission chief

ISLAMABAD: Pakistan has reached a staff-level agreement with the International Monetary Fund (IMF) for a new $7 billion loan program, the IMF said on Friday, the country’s latest move to turn to the global lender for assistance in keeping its fragile economy afloat.
Pakistan completed its a short-term $3 billion IMF program in April this year, with the release of a final tranche of $1.1 billion. The facility helped Islamabad avert a default last year. Pakistan’s Finance Minister Muhammad Aurangzeb said his government planned to seek a longer-term loan from the IMF to help stabilize the $350 billion economy after the end of the last program.
The IMF said the new loan deal, which will span 37 months, was aimed at strengthening fiscal and monetary policy as well as reforms to broaden the tax base, improve management of state-owned enterprises, strengthen competition, secure investment, enhance human capital, and scale up social protection through increased generosity and coverage in major welfare programs.
“The program aims to capitalize on the hard-won macroeconomic stability achieved over the past year by furthering efforts to strengthen public finances, reduce inflation, rebuild external buffers and remove economic distortions to spur private sector-led growth,” IMF’s mission chief to Pakistan Nathan Porter said in a statement.
The deal, which is subject to approval by the IMF executive board, came after the government of Prime Minister Shehbaz Sharif presented its first budget in parliament last month, promising an increase of up to 25 percent in salaries of government employees and setting an ambitious tax collection target.
The finance minister said Pakistan wanted to collect Rs13 trillion ($44 billion) in taxes, which would be 40 percent more than the last fiscal year’s. He said the government would ensure an increase in the number of taxpayers the country from the existing 5 million people who paid taxes in Pakistan.
Analysts said the new budget of about $68 billion, up from $50 billion in the last year, was likely to land a longer-term IMF bailout of up to $8 billion to help stabilize the economy.


Amnesty International criticizes police in Pakistan’s southwest for ‘unlawful use of force’ against protesters

Amnesty International criticizes police in Pakistan’s southwest for ‘unlawful use of force’ against protesters
Updated 18 min 44 sec ago
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Amnesty International criticizes police in Pakistan’s southwest for ‘unlawful use of force’ against protesters

Amnesty International criticizes police in Pakistan’s southwest for ‘unlawful use of force’ against protesters
  • Baloch demonstrators had a clash with police in Quetta while protesting enforced disappearances in the province
  • Amnesty urged the Pakistani authorities to ‘drop all charges against peaceful protesters’ in a social media post

ISLAMABAD: Amnesty International, a high-profile global rights organization, criticized police in Pakistan’s southwestern Balochistan province on Friday for the “unlawful use of force” to disperse protesters demonstrating against an alleged enforced disappearance last month.
Civil society groups and activists in Balochistan have frequently raised concerns about enforced disappearances, accusing state agencies of unlawfully detaining individuals to suppress dissenting voices, a claim the government has consistently denied.
According to the Baloch Yakjehti Committee, an ethnic rights movement, Zaheer Ahmed Baloch, a Balochistan resident and government employee, was forcibly disappeared on June 27, prompting his family’s demand to know his whereabouts.
The clash occurred on Thursday when demonstrators attempted to force their way into Quetta’s Red Zone, an area housing key government installations, to register their protest.
“Amnesty International condemns the unlawful use of force by the police in Pakistan, including the use of tear gas and batons at a peaceful protest in Quetta on 11 July and the mass arbitrary and unlawful arrests of peaceful protesters,” it said in a social media post.
“The protest was organized by the Baloch community in Quetta calling for the safe return of Zaheer Ahmed Baloch, who was forcibly disappeared on 27 June,” it continued. “Amnesty International has received information of several protesters who were injured and are in need of urgent medical treatment.”
Amnesty International highlighted “the arbitrary detention of peaceful protesters” violated the International Covenant on Civil and Political Rights, to which Pakistan is a signatory.
The organization urged the government to provide medical treatment to all injured protesters, especially those still in police custody.
Additionally, it called on authorities to immediately and unconditionally disclose the whereabouts of detained protesters and to either release all demonstrators or charge and try them promptly in a civilian court.
“Drop all charges against peaceful protesters,” it added.
Balochistan has witnessed a low-level insurgency by Baloch nationalist groups, who accuse the Pakistani government of exploiting the province’s natural resources while neglecting its development, a claim the state denies.
This province’s volatile situation has led to an increased influence of security and law enforcement agencies, exacerbating tensions between the state and the disaffected segments of Baloch society.


Ex-PM Khan’s party rules out coalition with Peoples Party, says no-trust vote always an option

Ex-PM Khan’s party rules out coalition with Peoples Party, says no-trust vote always an option
Updated 12 July 2024
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Ex-PM Khan’s party rules out coalition with Peoples Party, says no-trust vote always an option

Ex-PM Khan’s party rules out coalition with Peoples Party, says no-trust vote always an option
  • Barrister Gohar Khan says PTI took ‘principled stance’ by refusing to form government with PPP in February
  • He says PTI will determine its course of action after getting reserved seats in national, provincial legislatures

ISLAMABAD: Former premier Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party announced on Friday it had no plans to form a coalition government with the Pakistan Peoples Party (PPP), though it reserved the option of bringing a no-confidence motion against the sitting Prime Minister Shehbaz Sharif.

The statement was issued by the current PTI chairman, Barrister Gohar Khan, after securing a major legal victory in the Supreme Court in a case involving the reserved seats for women and minorities in the national and provincial assemblies, which are distributed among winning political factions on a proportional basis.

The PPP decided to support the ruling Pakistan Muslim League-Nawaz (PML-N) party after the February 8 general elections, though it did not join the federal cabinet, creating the impression that it was interested in keeping its political options open.

“If we had to form a government with the Pakistan Peoples Party, that option was available to us on February 9,” he told Independent Urdu in an interview. “We took a principled stance. Imran Khan does not believe in power-sharing. He practices people’s politics, so he does not need power-sharing.”

He maintained that his party was not against political dialogue, though its founding leader and the former Pakistani prime minister had ruled out any negotiations with the PPP, PML-N and Muttahida Qaumi Movement (MQM).

Asked about the no-trust vote after emerging as the single largest party in the National Assembly, the PTI chairman said the proposal had not come up for discussion, though it was always an option that political parties could exercise.

“Once we get the seats and come into the majority, we will see what needs to be done,” he said. “This issue can come under consideration since any political party always has this option. However, the party leadership has not made any decision regarding this matter yet.”


UN report says Kabul assisting Pakistani Taliban, Afghanistan’s ‘largest terrorist group’

UN report says Kabul assisting Pakistani Taliban, Afghanistan’s ‘largest terrorist group’
Updated 12 July 2024
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UN report says Kabul assisting Pakistani Taliban, Afghanistan’s ‘largest terrorist group’

UN report says Kabul assisting Pakistani Taliban, Afghanistan’s ‘largest terrorist group’
  • UN report says Kabul assisting Pakistani Taliban, Afghanistan’s ‘largest terrorist group’
  • It maintains the ongoing collaboration between TTP and Al Qaeda can transform the former into ‘extra-regional threat’

ISLAMABAD: The United Nations described the proscribed militant network Tehreek-e-Taliban Pakistan (TTP) as the “largest terrorist group” in Afghanistan this week, confirming Pakistani officials’ assertions the current Afghan administration is harboring the group and facilitating its cross-border attacks.

In November of last year, Pakistan issued a strongly worded statement against the Kabul administration, reporting a 60 percent increase in militant violence and a 500 percent surge in suicide bombings since the Taliban’s return to power in 2021.

Former caretaker Prime Minister Anwar-ul-Haq Kakar said there was evidence the Afghan Taliban were “facilitating” such attacks, despite repeated requests from Pakistani authorities to prevent their soil from being used against any state. He noted that 15 Afghan nationals were involved in suicide attacks in Pakistan while 64 had died in clashes with Pakistani law enforcement.

Pakistan also launched a deportation drive against “illegal immigrants,” primarily Afghans, citing security concerns.

“Notwithstanding continuing assertions by the Taliban that there are no foreign terrorist groups in Afghanistan other than ISIL-K [Islamic State of Iraq and the Levant, Khorasan chapter], Member States reported that over two dozen groups still operate in the country, enjoying freedom of maneuver under the de facto authorities with oversight from the General Directorate of Intelligence,” said the report by the UN Sanctions Monitoring Team released on Wednesday.

“TTP remained the largest terrorist group in Afghanistan, with an estimated strength of 6,000–6,500 fighters,” it continued. “One Member State expressed concern that greater collaboration between TTP and Al-Qaida could transform TTP into an ‘extraregional threat.’“

It said that Al Qaeda’s training had resulted in TTP shifting tactics and highprofile attacks against hard targets.

The report highlighted weapon transfers to TTP as well as the release of Daesh prisoners from local jails after securing their consent to join the banned Pakistani militant network.

“One Member State detailed how the Taliban exerts pressure on TTP through funding, reportedly providing 3.5 million afghanis ($50,500) on a monthly basis to TTP leader Noor Wali Mehsud ... while also directing him to garner additional sources of revenue from donors,” it added.

The UN document said the Afghan Taliban remained concerned that excessive pressure might push TTP towards collaboration with Daesh.

It acknowledged that TTP had intensified attacks against Pakistan, “significantly increasing from 573 in 2021 to 715 in 2022 and 1,210 in 2023, with the trend continuing into 2024.”

The report also noted that advanced military equipment, especially night vision devices transferred to TTP after the Taliban takeover, had added lethality to the groups attacks against Pakistan’s military border posts.

“Despite current stability, Afghanistan will remain a source of insecurity for Central Asia and the region in most scenarios,” it added, questioning the ability of the Taliban administration to with complex governance challenges in Afghanistan.