Daily Times

Pakistan’s oil import bill and local production of petroleum products declined by almost 20 per cent and 12 per cent respectively in the first half of the current fiscal year, according to data released by the Pakistan Bureau of Statistics (FBS). One the one hand, vital foreign exchange spending has been saved, while on the other it reflects slowing down of the economy also. According to the PBS data, oil imports fell by 19.87 per cent in the first six months (July-December 2019) as compared to the same period last year despite higher oil prices in the international market. The government must look for the reasons behind the dwindling oil consumption. It seems people’s ability to buy fuel has been reduced. After a steep slide of rupee, local oil prices have gone up considerably. Less oil import means less demand in the local market because of falling transport activity. One factor behind the reduced activity could be more operations by Pakistan Railways in the goods transport sector, but it will be naive to suggest that such a huge change has occurred overnight. Even though the government has been relying on liquefied petroleum gas (LPG) imports, which have gone up by almost 34 per cent, this factor should also be ruled out for the import bill of petroleum because of the limited availability of LPG in the country.

The major stakeholder of oil import – the automobile sector – has also been in the throes of recession for the last one year. The sector experienced a 72 per cent drop in sales in the first half of 2019-20. The sector does not forecast any good days ahead in the ongoing financial year. Though problem is somewhat universal in nature at the moment but the Pakistani automobile sector is facing reduced sales issues mainly because of federal excise duty ranging from 2.5 per cent to 7.5 per cent on engines of different horsepower, besides additional customs duty on raw material imports and record high interest rates. Moreover, the Federal Board of Revenue also keeps tracking the sector. Sad trends in oil import and automobile sector indicate the improved economy has yet to benefit the common man. *