Pakistan News And Discussion-9

[Naresh]

<b>Please refer to post 118 at Dec 22 2006, 04:48 AM</b>

[center]<b><span style='font-size:21pt;line-height:100%'>Stagnant oil production, reckless use create crisis</span></b> <!--emo&:flush--><img src='style_emoticons/<#EMO_DIR#>/Flush.gif' border='0' style='vertical-align:middle' alt='Flush.gif' /><!--endemo-->[/center]

<b>ISLAMABAD – International Financial Institutions (IFIs) have warned the government against the increasing energy crisis, with oil consumption skyrocketing to seven times of the production, which stays stagnant at 50,000 barrels per day for the last 20 years.</b>

According to well-placed sources, both the International Monetary Fund and the World Bank are not satisfied with the pace of the reforms in the energy sector and performance of the overwhelmingly state controlled energy industry. Therefore, the two have stressed upon the government to go for rapid and greater reforms in the energy sector to reduce over 80 per cent import dependence.

According to the sources, the two major donor organizations have doubted the potential of the existing state-owned energy industry to meet Pakistan’s ambitious plans to double the existing production by 2010 to 100,000 barrels per day through massive as well as effective reforms.

Both have noted in their recent concerns to the government that the energy sector reforms have failed to cope with the otherwise acknowledged structural reforms in the country. Moreover, the sources said, the IFIs have underlined that the energy sector has so far failed to respond to the multiplying demand with the country’s economy being on high growth trajectory.

“Western researches as well as donors have noted with pleasant surprise that Pakistan’s economy has managed to grow despite historically tragic Earthquake of 2005, yet they noted with concerns that energy feed to the economy remaining largely import based was alarming,” the sources added.

Pakistan’s demand for oil during last couple of decades has risen more than double of approximately 160,000 barrels per day in 1986 to over 350,000 barrels per day in 2006. While the production remained stagnant at 50,000 barrels per day during the last 20 years rendering the country into an alarming energy crises and enlarging oil import bill beyond half of the total imports.

Therefore, the sources observed that the government was in a fix between the political compulsions ahead of next general elections to keep prices affordable for consumers and the IFI’s requirements rationalizing the oil tariff in the domestic market. The rationalization of sources means completely independent as well as transparent linkage of the domestic prices with the international crude without any intervention of the federal government. The current regime can hardly afford especially in the pre-election political environment to ideally rationalize the energy tariff, which is bound to cost loss of vote bank, the sources added.

According to official estimates, Pakistan’s net oil imports are projected to rise substantially in coming years as demand growth outpaces increases in production. Demand for refined petroleum products also exceeds domestic oil refining capacity, so nearly half of Pakistani oil imports are refined products.

Therefore, the sources said, in their latest concerns conveyed to government of Pakistan the IFIs have noted lethal bureaucratic inertia impeding production growth, lack of indigenous capacity to explore proven reserves, and last but not the least crunched refining capacity were coinciding for an impending energy crisis.

The IFIs have also warned that the energy security for being chiefly import based is also threatening to imbalance foreign trade and the exchange rate besides having sever threats to choke the high growth economy running short of energy supply or in a different scenario energy running beyond affordability.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->