KARACHI, Oct 4: The government is preparing an oil contingency plan in apprehension of an outbreak of a full-fledged war between Iraq and the US led coalition, which could disturb global oil production, supply and distribution and push prices beyond 30 dollars a barrel.

Pakistan depends considerably on the imported oil. Top financial managers feel that Pakistan’s economy has been put in order after achieving stabilization but they fear a fast reversal if oil supply and prices problems assume an alarming proportion.

The government is holding a stock taking session of the Economic Coordination Committee (ECC) of the cabinet headed by the Finance Minister Shaukat Aziz on Monday at Islamabad to take a view of the oil storage and stocks of all items of strategic importance.

Well placed authoritative government sources said that every meeting of the ECC takes up stock taking of oil and other strategic items as a priority issue. But this time, next Monday this has become more than vital to have a close look at the storage capacities of oil and other items for fear of a crisis that could be of same magnitude as that of Gulf War in 1991.

Pakistan has roughly a storage capacity of 15 days oil requirement in the country. Last December the government decided in principle to raise this storage capacity level to 21 days. There is no word how much work has been done in that direction.

Total oil import bill had come down last fiscal year to 2.80 billion dollars from 3.36 billion dollars in 00-01 because of a drop in domestic consumption and fall in world prices. Oil consumption dropped last fiscal because of slow down in national economy. Reports suggest that economy is gradually picking up as indicated by rising demand of steel products and increase in non- oil and non-food bills in last three months.

Saudi Arab and UAE are the main suppliers of crude to Pakistan while Pakistan gets considerable quantity of oil products from Kuwait. Saudi Arab has been offering oil supply facility that is linked with volume but fluctuates between 800 million dollars to one billion dollars a year. It meets over 40 per cent of Pakistan’s crude oil requirements.

Sources said that Pakistan is in touch with Saudi Arab and all friendly countries on this issue and is preparing a contingency plan to meet the situation that could arise in the coming weeks or even in the next few days.

Iraq was one of the three main issues that dominated the Bretenwoods proceedings when finance ministers of many countries and top financial experts assembled in the annual board meeting of the International Monetary Fund and the World Bank.

Pakistan’s finance minister Shaukat Aziz is understood to have taken up the issue of implications of disturbance in oil supply and a flare up in oil prices with a number of countries.

Saudi Arab is understood to have given an understanding to offset the oil supplies if oil production in Iraq is suspended. There is, however, a looming fear that a retaliatory attack and destruction of Kuwaiti oil reserves could create a major international oil problem which could affect Pakistan too.

With this contingency plan, the government is also drawing up a Transition Programme to hand it over to the next elected representatives of the parliament.

Apparently, the first quarter performance of the current budget of this government looks pretty good. Revenue is said to have exceeded Rs90 billion target, expenditure is reported to be under control despite an unending stand-off with India, exports are up, the non-oil and non-food import is showing a rising trend giving a hint that domestic demand has picked up and economy is gradually on move, remittances are on rise and government is confident of getting an inflow of at least one billion dollars direct foreign investment.

Pakistan’s finance minister Shaukat Aziz is also reported to have received positive indications from the World Bank, IMF and Western countries for keeping on track the economic reforms. There are promises of more generous assistance including a write-off of one billion dollars by the US Congress, greater market access to Pakistani products in the US market and more grants for budgetary support.

Unless, of course there is any earth shaking development, there are reasons to believe that election results will not change the economic team of the government.

Poverty is one issue that the present government wants to educate the elected representatives. An economic growth of 4.5 per cent this year with five per cent plus next year and a better distributary arrangement should help in alleviating poverty to some extent in next few years.