Pakistan reels under petrol shortage: 5 reasons behind the crisis
Pakistan's severe petrol crisis has brought parts of the nation to a standstill and largely affected Punjab, the country's most populous province, and the national capital Islamabad, with pumps going dry and long queues of motorists waiting for hours to get a few litres of fuel.world Updated: Jan 21, 2015 16:11 IST
Pakistan's severe petrol crisis has brought parts of the nation to a standstill and largely affected Punjab, the country's most populous province, and the national capital Islamabad, with pumps going dry and long queues of motorists waiting for hours to get a few litres of fuel.
The crisis spread to the country's financial hub Karachi on Monday, triggering panic buying of petrol. There were also reports from different parts of the country of hoarding of petrol and black market sale of fuel at exorbitant rates.
"I've been waiting in the queue for three hours," complained taxi driver Iqbal Khan, stuck in a queue of hundreds of vehicles in Islamabad's G-11 neighbourhood.
"Where will we go when there is no electricity and no petrol?" he asked.
Petroleum minister Shahid Khaqan Abbasi on Monday apologised for the shortage, telling a press conference the situation had left him "ashamed" and pledging it would be resolved within "days".
Anger is growing over the shortage amongst Pakistanis -- who already have to deal with chronic power cuts that can see them struggle without electricity for 12 hours a day or more -- at a time of a global glut in oil supplies.
Solving Pakistan's energy crisis was a key campaign pledge for Prime Minister Nawaz Sharif in the run-up to the 2013 general election, and the shortage is heaping fresh pressure on his government.
Here are five reasons why Pakistan is facing the petrol crisis:
1. Most reports blamed the crisis on state-run fuel importer Pakistan State Oil (PSO), which was refused further credit earlier this month to pay for imports beyond its existing credit of about $2 billion.
PSO also failed to collect dues from private power generation companies for supply of furnace oil. The power companies, in turn, were unable to pay because of a circular debt as they too are owed large amounts by state-run power distribution companies.
2. Petroleum minister Abbasi blamed the crisis on an unexpected surge in demand and the unplanned closure of a refinery but his stance has been rubbished by economists.
3. Experts have also argued that the government has failed to build up adequate oil stocks as it has been seeking to keep expenditure on oil imports in line with spending limits under a loan programme with the IMF.
4. Pakistan was left with oil stocks for less than three days and imports of oil had totally dried up after PSO defaulted on its payments and said it would need at least Rs. 100 billion and eight weeks to retrieve the situation, leading newspaper Dawn reported.
The daily quoted PSO officials as saying no oil consignments had arrived at any port in Pakistan since the past two weeks. During a normal fortnight, six to eight ships, each carrying 65,000 tonnes of oil, come to the country.
5. PSO had exhausted all its overdraft facilities and its letters of credit lines had been choked as its total dues were more than Rs. 215 billion, a PSO official told Dawn. PSO is owed Rs. 190 billion by the power sector and Rs 12.5 billion by state-run Pakistan International Airlines.
"The entire problem is the result of a financial liquidity crisis in the state-owned oil company PSO. The government is trying to pin the blame on other factors but mounting evidence indicates that the crisis is financial in nature. High level accountability is necessary," Khurram Husain, a leading commentator on financial issues, told HT.
(With inputs from AFP)
First Published: Jan 21, 2015 15:39 IST