Pakistan exports record volume of fuel oil as economic crisis hits power usage

The country did not import fuel oil in March and shipped out 164,000 tons in April, the largest volume since 2017

NEWSDESK   May 16, 2023

As the economic crisis deepens in Pakistan, the typically import-reliant nation is witnessing a remarkable surge in fuel oil exports, reaching a record 164,000 tonnes last month, the highest volume since 2017.

According to data from Kpler compiled by Bloomberg, the country did not record any fuel oil imports during March and April.

The unprecedented shift comes in the midst of an acute economic crisis, characterised by a slump in activity, rampant inflation, and a weakening currency.

As of now, Pakistani officials are still negotiating with the International Monetary Fund (IMF) to resume a crucial $6.5 billion bailout programme to stave off potential default.

Also read: Substantial cut in POL prices announced

Citing lower power usage compared to previous years, Energy Minister Khurram Dastgir Khan highlighted in a recent interview the combined effect of cooler weather and elevated power prices on the decreased demand for electricity.

The current economic conditions have led to a significant reduction in domestic demand, driving the recent surge in fuel oil exports.

The data and insights provided by Kpler and reported by Bloomberg underscore the severity of Pakistan's economic challenges and the emerging trends in its energy sector.

The report follows a massive reduction of up to 10 percent in the consumer prices of petroleum products by the federal government.

On Sunday, the IMF said that the amount of external financing necessary to ensure that Pakistan stays current on its external payments remained unchanged throughout discussions for the 9th review of the programme.

However, the internal papers of the Ministry of Finance show that the IMF has asked for an additional $2 billion, according to a report by The Express Tribune that stated that the IMF has asked to arrange a total $8 billion to cover the requirements beyond June 30th period.

Read Pakistan’s refineries: a tale of missed opportunities

As part of the 9th programme review discussions, Pakistan and the IMF had identified $6 billion financing gap, according to the Finance Minister Ishaq Dar. So far, Pakistan has arranged $3 billion and the rest of the gap remains unfilled, delaying the revival of the stalled bailout package.

Saudi Arabia has promised to give $2 billion while the United Arab Emirates has committed $1 billion in fresh loans.

Last Monday, Finance Minister Ishaq Dar informed the executive director of the IMF that the remaining $3 billion can only be arranged once the IMF announces staff-level agreement and the board approves the 9th review along with the $1.2 billion tranche.

Obtaining commitments of “significant additional financing” is essential before the IMF approves the release of pending bailout funds that are crucial for Pakistan to resolve an acute balance of payments crisis, the IMF spokeswoman had said few days ago.

Dar also said on Thursday that Pakistan would not default on any foreign liability, with or without an IMF programme. He said Pakistan had fulfilled all the prior actions of the IMF and it was now up to the lender to sign the agreement.


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