Warns of negative effects of tensions on the economy, seeks “comprehensive strategy” for timely response
Prime Minister Shehbaz Sharif chairs a meeting in Islamabad to review austerity measures amid the economic situation. Photo: APP
ISLAMABAD:
Prime Minister Shehbaz Sharif on Thursday directed the concerned authorities in coordination with the provincial governments to take strict action against those responsible for creating an 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 remained stable but stressed the need to develop a comprehensive strategy to enable a timely response to any potential challenges.
He warned that escalating regional tensions could adversely affect the country’s economic outlook and stressed the need for all relevant institutions to remain vigilant.
He enjoined the relevant authorities to remain fully prepared to address any potential challenges arising from the prevailing regional insecurity and commended the public for supporting the government’s austerity and fuel saving measures.
The meeting was informed that the country currently possessed sufficient reserves of petroleum products to meet domestic needs and that measures had been put in place to ensure their continued supply in the future.
Meanwhile, amid fears of oil shortage due to recent US strikes on Iran, oil consumers may face a hike in prices of petroleum products up to Rs 40 per liter with effect from next week.
Sources said petrol prices could increase by up to Rs10 per litre, while high-speed diesel (HSD) could become more expensive by as much as Rs40 per litre.
The government hiked 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 for diesel rose to $138 per barrel, while gasoline traded at around $100 per barrel. barrel in the international market, a trend that is expected to put upward pressure on domestic fuel prices.
However, the government has not implemented the prescribed fuel price formula, which has affected the financial viability of the oil industry.
The oil industry had also conveyed serious reservations to the government regarding ongoing changes in the oil price formula.
Meanwhile, the National Coordination and Management Council (NCMC) held a meeting on Thursday to review the availability of petroleum products across the country.
The meeting was attended by Oil Minister 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 adequate stocks of petroleum products are available in the country to meet the prevailing demand.
During the meeting, the procurement challenges highlighted by the representatives of OCAC were discussed and addressed.
The committee noted that the concerns raised by the OCAC stemmed primarily from an abnormal increase in the sale of petroleum products during the first 15 days of July. Analysis presented by OGRA also indicated the possibility of hoarding in anticipation of a potential price increase.
The NCMC emphasized that the enforcement mechanism of OGRA should play a more proactive role and urged provincial governments to ensure that there is no hoarding and that petroleum products remain readily available to the public without any inconvenience.
The committee reaffirmed that the country’s petroleum stocks are adequate and directed all relevant stakeholders to ensure uninterrupted fuel supply nationwide.
The committee had met to review the oil supply security situation with the aim of securing oil supply amid continued tension in the Gulf region.
Earlier on Wednesday, OCAC drew the attention of the federal government to the “looming petrol crisis”.
In a letter to the oil minister, OCAC warned of an imminent petrol shortage across Pakistan, saying the country’s immediately marketable fuel stocks had fallen to critically low levels.
Currently, only about 15 days of storage (370 KT) is available and critical inbound cargoes are facing severe bottlenecks in customs clearance through the WEBOC system, the letter said, adding that supply pressures have been further exacerbated by the earlier rejection of a planned import cargo in June and a sharp increase in consumer demand triggered by expected global price increases.
Compounding these operational problems, Oil Marketing Companies (OMCs) are facing severe liquidity crunches due to the government’s non-release of Rs. 66.7 billion in outstanding Price Differential Claims (PDC), the letter noted.
OCAC sought government intervention to release these pending funds, speed up customs processing of imported fuel and provide the necessary support to ensure the uninterrupted nationwide flow of petroleum products.
