ISLAMABAD, Nov 1: Pakistan expects $1 to $1.2 billion saving (40 per cent) in its $3.5 billion annual oil import bill if the prevailing situation continues. But, this will result in massive industrial and economic down-turn and revenue loss.
Secretary Petroleum M. Abdullah Yousaf said at a news briefing here on Thursday the government was expecting $500-600 million saving due to decline in international oil price and another $500-600 million through reduction in consumption.
In another way, he said, the healthy decline in import bill would be around 15 to 20 per cent due to fall in international oil prices, another about 10 per cent due to reduction in consumption besides strengthening of the rupee against the US dollar.
“If the situation continues as today we expect oil import bill going down by around $1 billion,” he said. The decline in consumption was because of a combination of decline in industry and Afghan transit trade, he explained.
To a question, he said that Wapda’s furnace oil bill had reduced during the last quarter due to availability of more hydel power but this will increase during the current quarters, although it was lower than normal in October as well.
Mr Abdullah did not elaborate on the size of revenue reduction and impact on overall economy due to reduction in oil consumption saying such questions should be addressed to the finance ministry but said that economic down turn, cancellation of export orders and revenue loss were the follow-through effects of the prevailing tense situation.
On the other hand, he said, war risk premium imposed on ships to Pakistan had an additional cost because it was 0.5 per cent of the total oil import bill and then additional inventories for strategic reserves carried some additional burden.
To a question, the secretary said the government had deferred the gas price revision due in September this year to provide relief to the consumers against post-September 11 situation till next bi-annual review becomes due in March next year.
Abdullah Yousaf said that current petroleum stocks were satisfactory as required under the “war book” and were reviewed weekly. He said that stocks have been build up over the last few days from existing 10-12 days requirement to about 30 days.
To a question, the petroleum secretary said the petroleum ministry was in final stages of discussions with tribal leaders to lift force majeure imposed on oil and gas exploration in Balochistan. However, he expressed his inability to say when the government would be in a position to strike a deal with tribal leaders.
He expressed the hope that with the changing environment the government expected a substantial investment in the country particularly in the oil and gas sector. He said US sanctions were the main hurdle in raising fund for projects, but the situation would be different now.
The secretary said the government had taken up very promptly the issue of evacuation of expatriate employees of foreign firms from the country but were told they could not declare forced majeure under the agreement in the given circumstances.
He said that all the foreign employees have started returning and would be back in next few couple of weeks. He said that Chinese employees who used to stay here in difficult situation had also left Pakistan this time but were now returning.
The secretary said that deregulation of oil prices has paid well and prices were adjusted up and down in a transparent way by the oil companies advisory committee.