Daily Times

With the rising pressure on Pakistan’s economy and multiple major economic indicators predicting a grim situation. The newspapers continue to report the grim energy situation in the country. As the oil, gas and electricity challenges increase – both for the masses and the government; the decision-makers need to have a serious discussion about how they want to take truly fix the challenges ahead. Unfortunately, we are caught neck-deep in the political drama which does not seem to catch a break and is the real hindrance in the economic wheel.

The Russian delegate’s arrival for the Pakistan-Russia Inter-Governmental Commission (IGC) is great news and a step in the right direction. However, I am concerned that we may not be able to fully leverage this opportunity to our advantage. I say this due to the crippling energy sector that may act as added pressure in the negotiations. The latest report on DISCOs reveals a combined T&D (Rs. 122 billion) and billing collection (Rs. 175 billion) loss of close to Rs. 300 billion. On the other end of the energy spectrum is the circular debt which currently stands at a staggering Rs 2437 billion; an increase of more than 500 per cent in the last ten years. Also, not to forget is the mammoth Rs. 720 billion circular debt from the gas sector according to the last IMF report. As Pakistan steps into discount oil and petroleum discussion with Russia, may not be the most comfortable position but rather a desperate one. While the total energy sector circular debt has crossed over Rs. 4 trillion.

Our biggest flaw has been in our ignorance in identifying real challenges that face us. Over the last 75 years, we have developed a habit of rolling the finances from one place or another without actually meeting our financial debts and liabilities.

The more worrying part of the entire situation is the depletion of oil and gas reserves. Pakistan has utilized 985 million barrels (79.8%) of its total oil reserves of 1,234 million. Currently, approximately 249 million barrels of reserves remain. Baluchistan possessed recoverable oil reserves of 1.84 million barrels, of which 0.24 million barrels had already been extracted, leaving 1.60 million barrels. Khyber-Pakhtunkhwa (K-P) had recoverable oil reserves totalling 264.83 million barrels, of which 170.59 million barrels have been consumed. There are only 94,24 million barrels left. 457.43 million barrels were initially recoverable in Punjab, of which 383.20 million barrels have been used and 74.23 million barrels remain. Sindh had estimated recoverable reserves of 509.58 million barrels, of which 430.60 million barrels had been used, leaving 78.98 million barrels remaining.

The natural gas reserves also present a grim situation. More than 42 trillion cubic feet (tcf) of Pakistan’s natural gas reserves have been utilized. According to the Planning Commission, annual gas production was 1.27 tcf, falling short of the 1.43 tcf objective. Baluchistan has total recoverable reserves of 20,637 tcf but has burned only 15,182 tcf, leaving a balance of 5,455 tcf (26%). K-P had total recoverable reserves of 2,932 tcf, of which 1,746 tcf were burned, leaving 1,186 tcf (40%) remaining. The total recoverable reserves in Punjab were 3,977 tcf. Out of these, 2,379 tcf have been utilized, leaving 1,598 tcf (40%) remaining. 35.5% of recoverable reserves remain in Sindh. It had a total of 35,765 tcf in reserves, of which 23,053 tcf had been burned and 12,712 tcf are still to be utilized. The worse is OGRA’s suggestion of a 74% increase in Sui gas prices.

Hence the criticality and importance of the IGC session are tremendous. As we enter these negotiations, slightly scared of the global reaction, Pakistan is also blindsided by the overall diplomacy in the oil and gas in the Asian region. What began with China’s economic influence over the ASEAN region has now devolved into a power struggle between the two superpowers, with Russia attempting to expand to the east. In 2022, oil-hungry India consumed nearly 60 million barrels of Russian oil, and its oil greed appears to have no bounds. Is this simply India’s desire to fill up its oil reserves, or is it acting on the Quad’s behalf to influence oil diplomacy in the region? With a ban on Russia from Europe that fails to completely impact its oil and gas supply, the finest of the US oil refineries awaiting Russian oil supply which has been speculated as another reason for the increased Indian Oil supply and our historic negligence towards the oil and gas reserves, paying back our circular debts or improving the capacity of our refineries – it is, unfortunately, safe and sad to admit that Pakistan may also fail the oil diplomacy. This diplomacy will test the nerves of the officials closing a fruitful deal, especially with the IMF breathing down their necks and analysing their every move so closely.

Our biggest flaw has been in our ignorance in identifying real challenges that face us. Over the last 75 years, we have developed a habit of rolling the finances from one place or another without actually meeting our financial debts and liabilities. The latest Geneva convention is a classic point-in-case of this habit where we acquired soft loans and bank loans of over $ 9 billion to deflect the inevitable economic dilemma facing us. The enablers of government machinery in Pakistan have a lot to rethink, about their future diplomatic promises and deals and most of all about our internal capability.

The writer is the Foreign Secretary-General for BRI College, China. He tweets @DrHasnain_javed