Warns of the adverse effects of tensions on the economy and seeks a “comprehensive strategy” for a timely response
Prime Minister Shehbaz Sharif chairs a meeting in Islamabad to review austerity measures amid evolving economic situation. Photo: APP
ISLAMABAD:
Prime Minister Shehbaz Sharif on Thursday directed the authorities concerned, in coordination with the provincial governments, to take strict action against those responsible for creating artificial shortage of petroleum products in the market.
Chairing a high-level meeting on the economic impact of regional tensions, the prime minister said Pakistan’s economy remains stable but stressed the need to develop a comprehensive strategy to enable timely response to any potential challenges.
He warned that escalating regional tensions could negatively affect the country’s economic prospects and emphasized the need for all relevant institutions to remain vigilant.
He instructed relevant authorities to remain fully prepared to address any potential challenges arising from the prevailing regional uncertainty and commended the public for supporting the government’s austerity and fuel conservation measures.
The meeting was informed that the country currently had sufficient reserves of petroleum products to meet domestic needs and that measures had been taken to ensure their continued supply in the future.
Meanwhile, amid fears of oil shortages due to recent US attacks on Iran, oil consumers may face a hike in petroleum product prices of up to Rs 40 per liter from next week.
Sources said petrol prices could rise by up to Rs 10 per litre, while high speed diesel (HSD) could become costlier by up to Rs 40 per litre.
The government increased petrol and HSD prices by nearly Rs 14 per liter last week after cutting fuel prices for two consecutive fortnights, a move made possible by lower international oil prices following the Islamabad MoU.
The free on board (FOB) price of diesel rose to $138 per barrel, while gasoline was trading at around $100 per barrel in the international market, a trend that is expected to put upward pressure on domestic fuel prices.
However, the government has not been implementing the prescribed formula for fixing fuel prices, which has affected the financial viability of the oil industry.
The oil industry had also expressed serious reservations to the government regarding the continuous changes in the oil price formula.
Meanwhile, the National Coordination and Management Council (NCMC) on Thursday held a meeting to review the availability of petroleum products across the country.
The meeting was attended by Minister of Petroleum Ali Pervaiz Malik and members of NCMC, representatives of Oil Companies Advisory Council (OCAC), member Customs FBR, OGR and other relevant stakeholders. The committee noted that there are sufficient reserves of petroleum products in the country to meet current demand.
During the meeting, supply-side challenges highlighted by OCAC representatives were discussed and addressed.
The committee noted that the concerns raised by the OCAC are mainly due to an abnormal increase in sales of petroleum products during the first 15 days of July. The analysis presented by OGRA also indicated the possibility of hoarding in anticipation of a possible price increase.
The NCMC emphasized that the OGRA enforcement mechanism should play a more proactive role and urged the provincial governments to ensure that there is no hoarding and that petroleum products remain available to the general public without any inconvenience.
The committee reaffirmed that the country’s reserves of petroleum products are sufficient and directed all relevant stakeholders to ensure uninterrupted supply of fuel throughout the country.
The committee had met to review the oil supply security situation with an aim to ensure oil supplies amid continuing tension in the Gulf region.
Earlier on Wednesday, OCAC drew the federal government’s attention to the “imminent oil crisis.”
In a letter to the Petroleum Minister, OCAC warned of an imminent gasoline shortage across Pakistan, saying the country’s inventory of immediately salable fuel had fallen to critically low levels.
Currently, only about 15 days of stock (370 KT) is available, and critical inbound cargoes are facing severe bottlenecks in customs clearance through the WEBOC system, the letter said, adding that the supply strain is further aggravated by the prior rejection of a planned import cargo in June and a sharp rise in consumer demand triggered by anticipated global price increases.
Compounding these operational problems, oil marketing companies (OMCs) are facing severe liquidity crises due to the government’s failure to release Rs. 66.7 billion in outstanding Price Difference Claims (PDCs), the letter states.
OCAC sought government intervention to release these outstanding funds, expedite customs clearance of imported fuel, and provide necessary support to ensure the uninterrupted flow of petroleum products domestically.
