Page 9 - AsianOil Week 06 2022

AsianOil SOUTH ASIA AsianOil

Pakistan moves to

eliminate goods

and services on

petroleum to help

keep prices low

POLICY THE government of Pakistan has eliminated its
goods and services tax on all petroleum products
for the time being in a bid to help the South Asian
country keep gasoline prices as low as possible.
The decision was taken earlier in the week,
in conjunction with the administration of Paki-
stani Prime Minister Imran Khan maintaining
a degree of control over the nation’s petroleum
development levy (PDL), essentially continuing
a November agreement with the International
Monetary Fund (IMF) to help stabilise the coun-
try’s economy and permit the payback of loans.
Fuel prices in Pakistan hit an all-time high in The vast majority of products imported are
late 2021, reaching PKR146 ($0.84) per litre, just already refined given Pakistan’s limited domestic
as the nation was coming under increasing pres- refinery capacity.
sure from the IMF to raise PKR600bn ($3.45bn) In the past year, and throughout 2021, in large
by using the PDL to help repay outstanding part as a result of increasing supply issues and
loans, although this figure was later revised prices with the ongoing oil crunch, Islamabad
downwards following negotiations between the opted for an uptick in its imports as the coun-
IMF and Pakistani officials to PKR365bn. try looked to get industry back on track in the
It is thought, however, that despite govern- wake of a third devastating wave of coronavirus
ment efforts, the latest attempts to maintain (COVID-19) infections.
limits on petroleum prices rising are starting to This move saw a 52% increase in fuel oil
Islamabad opted exasperate the local population. imports to around 785,000 tonnes – spread
Comparatively speaking, the majority of fuel across the first nine months of the year – a jump
for an uptick in oils in Pakistan remain much cheaper than in of over half compared to the 12 months of 2020,
its imports as the neighbouring India, where prices are around when COVID-19 peaked.
Some reports also indicate that Pakistan sub-
60% higher, with domestic gas prices almost
country looked to 80% higher. sequently added in the region of 250,000 tonnes
to its gasoline and gasoil reserves over the course
Even with the IMF payback demands hin-
get industry back dering Pakistani efforts to keep prices on most of the past year, and has started to upgrade its
oil products low, the figures posted at gasoline ageing storage infrastructure.
on track. stations and in stores are still some of the lowest As a result, as Islamabad continues to hold
in the region. off IMF calls for repayment of loans on the one
In comparing prices across a range of fuel hand, and cope with oil prices looking ever
products, only Sri Lanka and Vietnam in the more likely to hit the $100 per barrel mark on
wider region currently outdo Pakistan in die- the other, domestic trade and financial analysts
sel prices, with fellow subcontinent neighbours are already looking back to the highs of 2011-
India and Bangladesh much higher by compar- 13, with some talk of fuel oil rationing starting to
ison, respectively 73% and 30% higher for gaso- make media headlines.
line, and 48% and 13% higher for diesel. How this will be received or implemented
At present Islamabad imports various forms remains to be seen, although with US dol-
of fuels from across the Middle East, primarily lar-linked exchange rates in Pakistan currently
the United Arab Emirates, Qatar and Saudi Ara- much higher than they were a decade ago, the
bia, in addition to lesser amounts from South same analysts are leaning towards things getting
Africa. worse before they get better.™

Week 06 11•February•2022 www. NEWSBASE .com P9