Pakistan facing oil drought as Forex problems is freezing industries
Oil distributors and some authorities in Islamabad claim that Pakistan is facing an oil crisis as the country’s economy is being affected by a continuous dollar shortage. On January 23, 16 hours power blackout occurred in the whole nation, highlighting an error in the South Asian country’s energy sector.
According to Government officials, the reason behind the power blackout was a technical fault in the distribution system. But a federal government official revealed the actual reason for the blackout was a shortage in fuel supply. The grid stationturned off the power supply system at night to save fuel, and when they tried to resume the system on Monday morning, it resulted in a crisis-like situation.
On January 13, Oil Companies Advisory Council sent a letter to the Ministry of Finance and a copy to about the difficulties faced by oil businesses in getting letters of credit (LC) to import fuel. A minor delay in the approval of LC can result in fuel scarcity. LC is used to guarantee the payment of the exporter issued by the bank of the importer.
According to the received letter, every month, Pakistan is required to import 650,000 tons of crude oil, 200,000 tons of diesel, and 430,000 metric tons of gasoline, whose bill cost will be $1.3 billion. Oil and Gas Regulatory Authority (OGRA) states that Pakistan has enough gasoline and diesel to survive for 18 and 37 days, respectively.
A London-based Pakistani economist, Yousuf Nazar, said Pakistan’s economy would face a serious issue if the IMF program wouldn’t be started fast. On January 18, State Bank Governor Jameel Ahmed said about 5,700 containers were stuck at Karachi port due to a shortage of dollars and restrictions on LCs.
Pakistan’s Government must understand the sensitivity of this issue and should work to restore our country’s economic stability