FOR the first time in the country’s history, the government has drawn up a hedging plan to take advantage of the fall in oil prices in the international market. Under the plan, the petroleum products will be bought for one to two years in advance. Initially the government plans to hedge price of POL products up to fifteen million barrels against its exposure of total oil imports that stand at sixty-eight million barrels per annum.
Whilst the Covid-19 poses many challenges, it has also opened many opportunities for the countries to catch. One of them is the plummeting oil prices which currently stand at the record low. It will be sagacious of the government if it immediately goes ahead with the hedging plan and rather further enhance its coverage after taking into account all the technicalities as it will help maintain stable and cheaper the basket of petroleum products in the country. This would not only slash our import bill but also leave a positive impact on the national economy. Keeping the oil prices on the lower side will also help contain the inflation level.
Whilst some other oil importing countries which have considerably enhanced their storage capacity over the years are resorting to filling their strategic reserves, it is quite unfortunate that our successive governments did not pay much attention to enhance the oil storage facilities regardless of charging petroleum development levy which was supposed to be spent on developing the petroleum sector including the establishment of storages. Anyway government should now also pay attention towards this end so that the country could timely benefit from the situation that currently prevails in the oil market. And most importantly, we must embark upon a strategy to reduce dependence on the imported oil. The government should seriously implement its renewable energy policy to achieve this objective. Then converting to electric vehicles will also go a long way in helping the country significantly cut its oil import bill.
