ISLAMABAD, May 30: Pakistan is estimated to import during the next financial year oil worth over $17.24 billion, about one billion dollars more than the country’s foreign exchange reserves and 15 per cent or about $2.3 billion more than current year’s oil import of $14.96 billion.
To partially offset the higher import bill, the government plans to generate about Rs105 billion by increasing development surcharge on natural gas in the new budget and may have to seek a fresh bailout package from the International Monetary Fund. A finance ministry official told Dawn on Wednesday that the ministry of petroleum and natural resources, in consultation with the ministry of water and power and Oil Companies’ Advisory Committee, had submitted a foreign exchange requirement of $17.24 billion for oil import.
The country’s total imports have been estimated at $43 billion, with the oil import bill to be the single largest burden on foreign exchange reserves currently standing at $16.4 billion.
The official said the government had decided to generate about Rs105 billion by increasing the special gas development cess, to be incorporated in the finance bill and imposed on five major areas — the industrial sector, fertiliser sector, Karachi Electric Supply Company and public sector power plants, and the CNG sector.
The cess, which is already applicable for some of the sectors, will be increased in the budget to finance major gas pipeline projects (both for imported and domestic gas).
The additional cess is estimated to increase CNG rates in Zone-1 by Rs159 per MMBTU (million British Thermal Units) and Rs121 per MMBTU in Zone-2. The gas rates for fertilisers will go up by Rs300 per MMBTU for fertilisers and Rs100 per MMBTU for industry, KESC, Wapda plants and IPPs.
Official data suggest that crude oil will have the largest share in total imports, consuming about $6.6 billion next year against $5.55 billion this year as crude quantities are anticipated to go up from this year’s 49 million barrels to 63 million barrels. These estimates are based on crude oil price of $126 per barrel next year against $85 billion estimated in for the current budget.
During the last fiscal year, crude import bill stood at $5.1 billion, although its quantities fell short of the budgeted target by a wide margin of 25 per cent.
Another major chunk of $6.3 billion will be spent on import of furnace oil whose consumption has been estimated to go up by about 14 per cent next year due to greater reliance on thermal power plants to reduce electricity deficit.
The furnace oil import for the next year has been estimated at 8 million tons against 6.9 million tons this year.
In June last year, the government had estimated furnace oil imports of 9 million tons at a cost of $3.4 billion based on international crude oil price of $80 per barrel and on expected completion of rental power projects during the current year.
However, most of the rental power projects did not materialise as planned and the Pakistan State Oil reduced furnace oil imports in the wake of ballooning circular debt and rising international prices that touched $130 per barrel. Even then the import cost of furnace oil stood at about $5.1 billion.
On the other hand, the overall import cost of oil products is anticipated to slightly come down to $9.8 billion next year against $10 billion during the current year.
The import of high speed diesel is expected to drop by about 37 per cent to $2.23 billion from $3.4 billion during the current year, mainly because of an expected drop in domestic consumption by about 1.2 million tons.
For the current year, the government had estimated HSD import of 3.6 million tons at $2.7 billion but its import was also slowed down by the oil companies because of circular debt and rising international prices. Thus, the HSD import was contained at 3.5 million tons, but its import bill stood at $3.4 billion.
The government has estimated that the furnace oil requirement would decline from current year’s 12 million tons to 11.4 million tons next year and reach 12 million tons in 2014-15. Likewise, the overall oil consumption that currently stands at 19.24 million tons will increase to 19.97 million tons, showing a growth of 3.8 per cent.
The power ministry has estimated a growth in furnace oil consumption by 6 per cent owing to greater electricity demand.
About 10 per cent growth has been estimated in petrol consumption due to greater use in generators in view of the power shortage.
The official said that although oil consumption had declined in the recent years due to poor economic performance, still it accounted for over 31 per cent of the total energy consumption.