Pakistan’s crisis-hit economy has failed to ‘energise’ despite doses of relief pumped in by the International Monetary Fund (IMF) and its Gulf allies, compounding its woes as its political class readies for fractious national elections.
Media reports on just two days this week, October 17 and 18, indicate further fuel crunch, but no solution in sight and more problems ahead as the caretaker government appealed for more funds and long-term foreign investments in the energy sector.
On the two days, the PIA cancelled 17 and 48 scheduled flights respectively due to aviation fuel shortage, disrupting domestic and international aviation and adding losses to those the state-run has piled up. “PIA is running on fumes, both literally and figuratively,” Dawn (October 18, 2023) commented, calling the state-owned airliner a “white elephant.”
The government cancelled its state-to-state import of Russian oil and gas that it had been seeking at concessional rates like its neighbour India. A special-purpose vehicle (SPV) planned for it has been shelved and private oil companies are being asked to pursue fuel imports. This may well be hampered by the overall foreign exchange crunch. The sole import from Russia at concessional rates was paid for in Chinese currency.
Interim Prime Minister Anwarul Haq Kakar was in China to participate in the 3rd Belt and Road Forum (BRF) for the International Cooperation Conference, also marking the tenth anniversary of its flagship, the China-Pakistan Economic Corridor (CPEC) is the flagship. Kakar invited Chinese investment in solar parts to “support Pakistan’s endeavours for climate action and also help reduce the energy import bill,” Dawn newspaper (October 18, 2023) reported.
Kakar had separate meetings with Presidents Xi Jinping and Vladimir Putin, but media reports indicated only long-term plans, including seeking investments in Pakistan’s energy sector. Immediate trade in energy does not appear to have figured.
Plans to buy concessional fuel from Russia were shelved due to the ‘risks’ involved, an official of the state-run Pakistan Refinery Limited told The Express Tribune (October 18, 2023). “This decision aims to diversify energy sources and reduce risks associated with G2G deals, as experts believe that oil imports from Russia were a gamble due to the absence of diligence being conducted by the previous government,” the newspaper reported.
The SPV plan, which would have involved depositing gains from discounted Russian crude to benefit consumers, was shelved due to a lack of substantial reduction in consumer prices. Under the new approach, refineries will import Russian crude and the government will benefit from the 46 per cent tax deposited by the refineries in the national exchequer. Pakistan plans to import more Russian crude oil in the future,” The News International (October 18, 2023) reported.
At home, Shell Pakistan Limited (SPL) announced that a UK-based firm Prax Overseas Holdings Ltd has expressed their interest in buying 77.42 per cent shares of Shell. The company stopped operations earlier this year and, like many other industries and trades has been hit by a shortage of spares and accessories caused by the hard currency crunch.
The government announced a 12.3 per cent decrease in fuel prices this week. However, Dawn (October 17, 2023) said in its editorial: “Within this month the government has cut the cost of fuel prices twice but as reported by the Sensitive Price Index it did not bring any significant change in curbing surging inflation. However, it is understood that stable fuel prices bring larger stability to the market and can aid in slowing down the surging costs.”
The shocker for the consumers has come from the Urdu newspaper, Daily Khabrein (October 18, 2023): “The caretaker government has decided to increase gas prices before winter. There are reports that a decision has been taken to increase gas prices by 100%. These reported plans in winter is very worrying. The IMF has also expressed concern over the fear of an increase of 46 billion rupees in the revolving credit of the gas sector during the current financial year. Now, one should ask the government, what disaster will a hundred per cent increase in gas prices bring to the people.” The newspaper said the public has already resorted to using firewood for its fuel.