When international oil prices touched the all-time high of $147 per barrel in 2008 there was not a shortage of petrol. Now in 2015, the country faces its worst-ever petrol crisis at a time when oil is at a mere $47 per barrel. What kind of (mis)management is this? Well, its called Dar-nomics which focuses on cleaning accounting books at the cost of socioeconomic benefits.
His creative accounting has numerous examples of hurting the economic potential. The decision to keep rupee artificially appreciated had badly hit exporting potential last year and he also had diverted good chunk of public finances to commercial banks kitty by heavily relying on expensive PIBs for government financing.
The government is content with just forming committees to find out the reasons for this mismanagement whilst different ministries are busy passing the buck to each other. Is this the model of good governance PMLN government is all about?
The simple explanation to this chaos is nothing but sheer mismanagement by key decision makers and their poor priorities. Finance Minister Dar was totally consumed with meeting the IMF prescribed December-end targets for the fiscal deficit and governments borrowing from the central bank even as revenues were falling short and expenditures were crossing limits for host of reasons.
To counter it, the finance ministry was reluctant in releasing funds to PSO and other companies in oil chain without realizing what could be the repercussions of this decision. The power sector payables are approaching Rs600 billion while the circular debt is inching up to Rs300 billion. But that problem is age old, it never resulted in petrol shortage. Why now?
The default is usually on furnace oil as it is being bought on credit while petrol buying is normally on cash so one could never imagine its shortage. What probably happened is when PSO was failing on its FO payments, it started using the cash for petrol to pay for FO and eventually it fell short of cash for buying petrol.
PSO and other oil marketing companies are to blame as in the days of falling oil prices they were reluctant to keep desired inventory levels to not book losses? It is indeed a shame that a company with revenues exceeding a trillion rupees, is loathe to incurring a loss of Rs6-10 billion to take care of the public it claims to serve.
The lame excuse coming from government for not releasing timely funding is that enhanced demand for petrol is causing the shortage. Yes, 25-30 percent cut in petrol prices has induced some demand. The shortage of CNG has also pushed its users towards petrol consumption. But due to falling prices, despite increase in volumes, value of oil imports is still less than what it was in the corresponding period last year. Clearly no demand spike caused the conundrum.
If it is the reason, should the policymakers not have anticipated? The finance ministry came up with constrained supply to keep the macroeconomic numbers rosy on books. In the process, people are finding it hard to refuel their vehicles.
The question is how long this problem would persist? Well, the shipment of oil is due on 24th January and it usually takes 1-5 days for fuel to reach upcountry. So people, better use the scarce commodity with great care till the weekend. Here is hoping those at the helm take a cue and revert to weekly price mechanism to minimize chances of inventory losses and this should also be an eye-opener why circular debt is such a glaring problem that must be addressed immediately.
Mind you, rumour has it that furnace oil stock will not last more than a day or two. So if you thought, petrol shortage was the worst, you were wrong. Then again, we can use this experience to get educated on what living in the Stone Age must have been like.

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