KARACHI, March 27: A more than 58 per cent increase in import volume of petroleum products during the eight months (July-Feb) of the current fiscal year has kept Pakistan’s total oil import bill higher than last year despite a sharp drop in international crude oil price from $78 a barrel in August-September 2006 to about $50 at present.

Out of $4.70 billion total oil import bill during July to February 2007 the petroleum products import claimed $2.34 billion.

Total oil import bill in the current fiscal year is estimated to be near $6 billion that would include more than $3 billion for petroleum products import.

A jump of more than 58 per cent in petroleum products import volume and about 50 per cent in cost is being attributed to the growing demand of fuel in thermal generation of electricity. Officials say Pakistan’s energy demand is increasing by 10 to 12 per cent a year.

Analysts attribute Pakistan’s rising oil import bill to mounting demand from electric generation sector and also from the transport sector rather than from real productive sectors — industry and agriculture.

The State Bank of Pakistan reported acceleration in large scale manufacturing during the first quarter of the current fiscal year to 9.7 per cent. This growth, however, is reported to be narrow-based as out of 15 sub-groups, only 5 sub sectors with a weight of 47.6 per cent in LSM showed rise, four industries with 18.2 per cent weight showed decline.

The electronics sub sector showed the highest growth of 41.6 per cent. An entirely import-based sub sector, it is also the biggest consumer of electricity that showed growth because of generous bank loans and hence the unusual rise in electricity consumption and growing dependence on oil products import for electricity generation.

Pakistan depends on more than 43 per cent on thermal based electric generation because of capacity constraints in hydel generation. Fast depletion of gas reserves has forced the government to switch over to the oil fuel and hence the unusual rise in import of petroleum products both in volume and cost.

Import of crude oil in the current fiscal year so far is down by over 11 per cent in volume and less by over 4 per cent in price. In the last eight months the total crude imports cost $2.36 billion as against $2.46 billion last year.

While total import bill has increased by about 17 per cent in last eight months mainly because of a rise in volume of petroleum products, the overall imports are up by about 10 per cent to $19.79 billion as against $18 billion in eight months of 2005-06.

The non-oil import is up by only 6.6 per cent in the current fiscal year mainly because of more than 21 per cent increase in transport, 12.2 per cent in machinery, 7 per cent in food bill, 13 per cent in textile, a decline of about 14 per cent in metal group, a more than 4 per cent fall in agricultural and chemical group.

The import of unspecified items clubbed as “other items” claimed more than $1.6 billion in first eight months, which is 43 per cent more than what was spent on import of these items.

Import of motor cars in CKD, SKD and CBU with air craft and motor boats claimed $1.5bn, which is 21.2pc more than last year. By end of the year the figure is expected to touch $2bn figure.

Pakistan’s total import bill at the end of the day is estimated to close at $27 billion and trade imbalance is likely to be in close vicinity of $13 billion plus range.

The officials are confident of quite a good amount of inflow of foreign exchange in the current fiscal year to fund the current account deficit. The foreign exchange inflows in the first eight months are beyond the initial estimates of the planners and are being mentioned as one of the factors of money expansion.