REPORTS indicate the prevailing energy crisis is forcing the authorities concerned to explore all options for diversification of oil and gas imports to ensure uninterrupted supply of energy at affordable costs. There is a proposal to finalize an oil supply agreement with Oman, which has been pending since 2021 for various reasons and factors. The Economic Coordination Committee of the Cabinet (ECC) has already cleared the draft agreement after its vetting by the relevant ministries and agencies and an accord is reportedly ready for signing.
Pakistan sourced the majority of its imported petroleum and oil supplies from the Kingdom of Saudi Arabia (KSA), Kuwait and the United Arab Emirates (UAE). The KSA is the primary long-term supplier of crude and refined petroleum products and Pakistan benefited hugely because of liberal terms and conditions for supplies as the Kingdom frequently provided crude and petroleum products on a deferred payment basis, which helped the cash-starved country a lot. The UAE has also been a major supplier of refined fuels and crude while Kuwait offered long- term supplies through Kuwait Petroleum Corporation. Qatar has been a key supplier of LNG and this Government-to-Government arrangement lent stability to the domestic market and boosted economic activities. However, the situation has changed a lot due to the Gulf war, disrupting smooth imports due to closure of the Strait of Hormuz. Now the Houthis are deliberately targeting Saudi oil infrastructure and threatening to close the Bab al-Mandab trade route triggering uncertainties about oil supplies from the KSA.
The unending war, targeting of oil tankers and possible closure of the Red Sea route are pushing the prices of oil higher on an almost daily basis and its impact is badly being felt by people of Pakistan in the shape of upward revision of prices of petrol and diesel. In this backdrop, the move to sign an agreement with Oman is quite logical and raises hopes for smooth supplies at comparatively lower prices due to proximity factor. No doubt, governmental agreements and arrangements take some time to materialize but finalization and implementation of the agreement with Oman should be taken up on priority basis. In fact, in hindsight, Pakistan should have entered into an agreement with Oman much earlier because of clear advantages and benefits. The country could have clinched a somewhat favourable deal in normal circumstances whereas terms and conditions might be different now because of the changed regional environment. The move shows there are, indeed, options to bridge over the crisis if sincere efforts are made to explore all avenues. It is not the job of the cabinet members to sound an alarm only over an evolving situation as they did during the briefing on Tuesday.
There is also a general impression that the handling of the price phenomenon was not prudent and regrettably instead of providing genuine relief to people of Pakistan, the Government is exploiting the opportunity to raise its revenues at the cost of the ordinary soul. The ministers claimed that the government was seeking to absorb part of the external shock to protect vulnerable segments of society. The fuel subsidy programme becomes irrelevant because of the enormity of the crisis and its impact on the entire society. The Government is evasive as far as the imposition of uncalled-for petroleum levy on oil products is concerned. It is ironic that on the one hand the Government keeps on increasing the prices of petrol and diesel on a daily basis citing changes in price of oil in the global market but on the other hand it is not willing to withdraw the levy that increases the cost of per litre petrol and diesel by Rs. 80. A timely decision in this regard will not only mean substantial relief for all citizens but could also give a boost to economic and commercial activities.
