Pakistan is cutting electricity to households and industry as the cash-strapped country can no longer afford to buy coal or natural gas from overseas to fuel its power plants. The country is now bracing for the worst diesel shortage, experts have warned.
Express Tribune reported that economists and industry experts have warned Prime Minister Shehbaz Sharif that the country would face the worst shortage of diesel next month amid the harvesting season as its stocks are plummeting.
Sources said that diesel stocks were depleting fast as only an 18-day supply remained in the country. The Pakistan State Oil (PSO), the country's largest oil exporter, earlier had made an attempt to import diesel by floating a tender but no trader participated. Now, the PSO had arranged one diesel cargo at the highest premium rate of $13 due to the non-availability of diesel in the global market following the Russia and Ukraine war.
Sources told The Express Tribune that the experts had urged Shehbaz to increase oil prices in order to avoid the swelling price differential claims that accumulated to around Rs 60 billion in only one month of April 2022.
The Prime Minister was also informed that there would be no protests if the oil prices were increased. However, protests would start if diesel was not available in the market due to the poor financial health of the oil industry on account of rising price differential claims.
The interesting thing was that there was no approval from the government to clear the price differential claims of the oil industry. Further, PM Shehbaz had refused to increase the oil prices despite the grave situation of the oil industry.
Against this backdrop, the Pakistan government has directed the oil refineries to boost local production to tackle the looming diesel shortage crisis. However, the refineries in the country were also facing a financial crisis due to the pending price differential claims following the freezing of oil prices.