ISLAMABAD, Sept 15: Oil import bill continues to rise and is most likely to touch an all time high $6 billion by the end of the current financial year. Official sources told Dawn on Thursday that the oil import bill, which increased from $3.1 billion in 2003-2004 to $4.6 billion in 2004-05, will end up at $5.5-$6 billion in 2005-06.

The Ministry of Petroleum and Natural Resources has given its latest assessment of oil import bill to the higher authorities, saying that there had been a revenue loss of over Rs67 billion since May this year due to increase in the international oil prices which were not fully passed on to the consumers.

The sources said that this revenue loss was expected to further increase as the government could not revise oil prices upward in quick succession.

“Pakistan’s oil import bill would have reached $9 billion had the government not provided adequate supplies of gas to power sector,” a source said.

He, however, claimed that oil prices in Pakistan were still lower than India and many other developing countries. “There is a difference of 15 to 30 per cent in oil prices when compared with India and as such we are still in a better position,” he added.

The sources said it was in that backdrop the government was actively considering a proposal to go for hedging of oil prices with a view to lowering the increasing oil import bill.

A number of international banks have expressed their willingness to enter into an agreement with Pakistan government for hedging the oil prices.

The senior representatives of Merrill-Lynch Bank gave a presentation to the officials of the Ministry of Finance on Thursday, and expressed their willingness to hedge oil prices for Pakistan.

Pakistan was experiencing difficulties in meeting the growing oil prices that were still $59 a barrel after having touched $70 a barrel recently.

Another source said that if an agreement with any foreign bank reached, oil prices would be fixed and the profit and loss would be borne by the bank. “It involves a risk but then you have to take this risk to minimize your rising oil import bill,” he said.

“Suppose Pakistan enters into an agreement with any foreign bank to keep oil prices in the range between $55 to $60 a barrel for certain period and during that period the international prices jump to $65 or $70 a barrel or more, the bank will have to face the loss but in case of lowering of prices, the bank will gain. And this is how we plan to contain our oil import bill,” a source said.