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With the Falling Price of Petrol, Pakistan Plunges Into a Deeper Fuel Crisis

There is a huge fuel shortage in Lahore and in other cities of Pakistan and people are waiting in long queues for gasoline. Image by Iftekhar Ahmed. Copyright Demotix (15/1/2015)

There is a huge fuel shortage in Lahore and in other cities of Pakistan and people are waiting in long queues for gasoline. Image by Iftekhar Ahmed. Copyright Demotix (15/1/2015)

A shortage of petrol — a basic commodity to which the price of many other commodities are linked — across Pakistan is adding further misery to the country's energy situation, long plagued by power and gas shortages. 

The shortage of imported oil began in mid-January 2015, mainly due to poor supply management from the authorities facing a debt crisis. Pakistan State Oil, which supplies around 80 percent of the country's fuel, ran out of money and banks have refused to extend the company any more credit, so it decided not to initiate imports in December 2014 without coming up with a way to meet the local demand in the coming months.

People were seen pushing their cars to petrol stations and forming long queues. Some came with Coke bottles in hand to fill up on the limited supply of petrol. This has brought transport in affected areas almost to a grinding halt.

The recent worldwide decrease in fuel prices has deepened the crisis. Pakistan reduced its petrol price a few separate times to tackle the situation. The current price is at around 78 Pakistani rupees per litre, down from 103.59 per litre — a 25% reduction in three months.

Haroun Rashid, a businessman, tweeted sarcastically:

There has been serious failure on the part of Oil and Gas Regulatory Authority (OGRA), which did not keep an accurate check on the level of stock the oil manufacturing companies were keeping. As the oil prices across the world plummeted, the Pakistani government lowered the price of fuel. Often the decrease in price was announced in advance by the government in order to give the nation, a good news. It was not a good news for the oil manufacturing companies who had stocks procured at a higher cost and had to sell at a lower cost announced by the government. They are supposed to keep reserves of 20 days in their inventory which they did not. Some are speculating that the oil companies in the country created an artificial shortage in order to reduce their inventory loss due to the price cut. This resulted in increased panic among the people and the demand for oil increased. Allegedly the petrol pumps exploited the situation and sold petrol in black market from 300-500 Rs – which is more than five times of the official rate.

This has put pressure on the government too. Some found it an appropriate time to question the competency of the government.

Naz Baloch, vice president of opposition party Pakistan Tehreek-e-Insaf, tweeted: 

Facing the crisis, Prime Minister Nawaz Sharif cancelled his World Economic forum trip to Geneva and has apologized to the nation for the acute shortage of petrol. He immediately suspended four top bureaucrats for failing to deal with the crisis and ordered a probe. Petroleum Minister Shahid Khaqan Abbassi said in a press conference:

I accept responsibility and I am ready to tender resignation if there is any solution in it.

However, Finance Minister Ishaq Dar absolved himself of the responsibility and called the petrol shortage a conspiracy against the government.

Junaid Qaiser, a writer,journalist, and coordinator of the Pakistan People Party social media from Punjab, mocked the crisis:

It is also expected that with further reduction in the worldwide price of petrol in February, the price in the country would be further slashed and the crisis would get worse.

The government has asked the citizens not to panic, and some are rejoicing at the falling price of petrol:

It is feared that if the prices continue to fall in the coming months, there will be a shortage worse than this one. But instead of seriously trying to solve the situation, concerned departments are playing the blame game. Will this make things even worse?

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