Oil crisis

The crisis had also given birth to jet fuel shortage at airports

Petroleum refineries, which save the precious $2 billion forex reserves per annum in oil import with local production, have been lying virtually closed for about a month now due to supply glut in the country. The government’s inefficiency, inconsistent policies and poor planning have caused the shutdown while the government’s response to the crisis is compounding the sufferings instead of resolving it.

PM Shahid Khaqan Abbasi’s sudden decision to immediately shut down oil-fired power plants at the end of October — after coming in line with the imported LNG-based power plants — resulted in brimming all the oil storage facilities and bowsers with furnace oil while pipelines have gone choked with oil.



Despite the grave situation, the government continued to import furnace oil. And to consume the imported oil, the government later resumed some of the oil-fired power plants on full capacity and others on minimum possible capacity. Locally-produced oil failed to find roads to the power plants despite refineries having reduced their oil price by up to Rs10,000 a tonne.

The crisis has taken place despite the DG oil reviewing the fuels’ availability twice a month. If the government would have resumed all the oil-fired power plants at full capacity for about a month only, the crisis would not have prolonged.

The government’s ill response to the crisis has proved its poor governance once more. And that it has made investors, including the foreign ones, anxious and uncertain about their future investment plans in Pakistan.



Besides, the government has put thousands of jobs at stake in refineries, which meet 30% of local oil needs. The government has categorically told the refineries it can do nothing for them and that they may get rid of the situation by exporting the excess oil at their storage facilities.

The crisis had also given birth to jet fuel (JP-1) shortage at airports, which the government overcame through imports. However, if the crisis continues it would not be long before the country would be short of diesel and petrol as well.

Published in The Express Tribune, December 23^rd, 2017.

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