Warns of adverse effects of tensions on economy, seeks ‘comprehensive strategy’ for 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 an artificial shortage of petroleum products in the market.
Chairing a high-level meeting on the economic impact of regional tensions, the premier 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 directed the 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 briefed that the country currently possessed sufficient reserves of petroleum products to meet domestic requirements, and that measures had been put in place to ensure their continued supply in the future.
Meanwhile, amid oil shortages fears due to recent US strikes on Iran, the oil consumers may face an increase in prices of petroleum products up to Rs40 per litre effective from next week.
Sources said petrol prices could increase by up to Rs10 per litre, while high-speed diesel (HSD) may become costlier by as much as Rs40 per litre.
The government increased petrol and HSD prices by nearly Rs14 per litre 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 climbed to $138 per barrel, while gasoline was traded 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 fuel pricing formula, which has affected the financial viability of the oil industry.
The oil industry had also conveyed serious reservations to the government regarding continuous changes in oil prices 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 for Petroleum Ali Pervaiz Malik and members of NCMC, representatives of the Oil Companies Advisory Council (OCAC), Member Customs FBR, OGR, and other relevant stakeholders. The committee noted that sufficient petroleum product stocks are available in the country to meet the prevailing demand.
During the meeting, the supply-side challenges highlighted by the representatives of the OCAC were discussed and addressed.
The committee observed that the concerns raised by OCAC primarily stem from an abnormal increase in petroleum product sales 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 OGRA’s enforcement mechanism 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 general public without any inconvenience.
The committee reaffirmed that the country’s petroleum product stocks are sufficient and directed all relevant stakeholders to ensure an uninterrupted fuel supply nationwide.
The committee had met to review the oil supply security situation aimed at ensuring the oil supply amid continued tension in gulf region.
Earlier, the OCAC on Wednesday drew the federal government’s attention to the “looming petrol crisis”.
In a letter to the petroleum minister, the OCAC warned of an imminent petrol shortage across Pakistan, saying the country’s immediately saleable fuel inventory had fallen to critically low levels.
Currently, there are only about 15 days of stock (370 KT) available, and critical incoming cargoes face severe customs clearance bottlenecks through the WEBOC system, the letter stated, adding that the supply strain is further worsened by the previous rejection of a planned import cargo in June and a sharp increase in consumer demand triggered by anticipated global price hikes.
Compounding these operational issues, Oil Marketing Companies (OMCs) are facing severe liquidity crises due to the government’s failure to release Rs. 66.7 billion in outstanding Price Differential Claims (PDC), the letter noted.
OCAC sought government intervention to release these pending funds, expedite customs clearance of imported fuel, and provide necessary support to ensure the uninterrupted nationwide flow of petroleum products.
