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With SBP reserves at approximately $4 billion, time is not far when there would be widespread shortages of essentials, if there are no inflows of dollars with IMF on board. On top of the list is energy products – especially petroleum. The country has stocks of around 30 days of diesel (HSD) and 18 days of petrol. Then there are plans for imports by refineries and OMCs – the L/Cs are opened for another 15-20 days. This would mean the country is covered by 4-5 weeks of petrol and 6-7 weeks of HSD.

In normal circumstances, this may not raise red flags. But we have all the reasons to worry today. With every passing day, LC opening is becoming difficult. Lately, top executives of petroleum companies have had to use their clout to establish L/Cs. And going forward this may not work. The government may be able to open L/Cs of PSO for some time which covers 45 percent of the country’s needs. Some need to be covered by local refineries which rely on its 30 percent production on local crude, as the rest is imported.

There won’t be a complete blackout but there would be shortages in many sectors which would have a ripple effect. Assuming that there are no LCs opening on fresh imports (while those which are opened will confirm), the shortages may start in 2-4 weeks. When the stocks start replenishing, hoarders will come into play (in HSD, as it can be easily stored), the supply will be constrained, and the overall supply of petrol will start reaching dangerously low levels as well. OMCs may start rationing supply by themselves to elongate the stocks for a few more weeks.

However, if PSO keeps on doing partial imports, the shortage may start somewhere in March and the situation may worsen in April – this is the likely scenario, in case of no shoring up of SBP reserves.

April is a peaking season of HSD, as the wheat cutting starts. If the HSD becomes short at that time, there will be a risk of loss in the wheat crop. If that happened, there would be staple food shortages a few months later.

Some crude oil imports will continue without any dollars in the SBP account, on account of the Saudi deferred oil facility. This will keep local refineries operating partially, along with their use of local crude. But here the preference could be defense-related. Priority would be to make jet fuel for air force and general aviation available.

In the process, summer comes and the demand for energy peaks for air conditioning needs. For that, gas (LNG) imports will become critical. Then the country has to decide what to import within limited and falling exports and remittances inflows. There would be less imports of other fuels such as coal and furnace oil. This would mean long hours of load shedding even in posh urban areas. Then there would not be HSD available for the rich and businesses to run standby generators. There would be long lines at the petrol stations for a few liters of petrol.

This all would mean many businesses in the retail segment – working fine so far, getting majorly affected. Not to mention, the manufacturing industry is closing one by one, and those which are operating are only doing so partially. The situation will only get worse. Pakistan must arrange dollars, or face shortages.

Comments

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Lol Jan 17, 2023 11:38am
And then people say "[email protected] w1Ll n0t DeFaulT" - we will default, see riots and ultimately seizure of assets
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Qaisar Saleem Jan 17, 2023 03:33pm
Panic shooter bubble
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Rana Altaf Jan 17, 2023 07:28pm
Fact Sheet Blessing in disguised. We may say it that Allah is helping us to concentrate only on domestic energy resources because we are not getting loans for importing LNG or imported fuel coal Now our concentration is on all Electric and produce electricity from thar and build dams of KALA BAGH dam for control of flood. I continuously concentrating on Electric motor cycle and electric bicycle first step. Convert three imported coal power on local coal, shut down for ever lng power. 100 percent turn around Pakistan and make it into surplus Balance of Payment. The cheap energy means more export and very less imports. The solution is import cut of all energy product. 98 % problem will be resolved. LNG is not for power generation but only for textiles and fertiliser. If we have to purchase it. You see Imran every month goes for loan or grants and it finished very quickly but we were not learning lessons. This was lesson for PPPP and PMLN that IPPs and Lng or coal imported energy is not solution. Now move to all Electric start from electric bicycle and motor cycle. Ban on combustion engines motor cycles and car and buses etc. Convert 100% three coal power plant on local. Shut down for ever lng power plant. One time loan from China may be received for coal power plant conversion. This will 100 percent resolve our all balance of payment issues Rana Amir +61490867813
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Sunny Jan 17, 2023 09:10pm
@Rana Altaf, Not one point on your agenda will every work. There is theft of electricity, water, and gas by single household and factories. If theft is not stopped it all fails. As Imran Khan said there is no accountability. Allah punishes community that has has no accountability. It's Allah's law.
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نعیم ںھائ Jan 17, 2023 10:48pm
Dont worry
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Naqvi Jan 17, 2023 10:58pm
@Rana Altaf, Thanks for yr advise. Hope authorities will contact u. Appreciate yr patriotism.
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Hussain Jan 18, 2023 12:01pm
@Rana Altaf, Need more people like you in Pakistan. May Allah bless you with health wealth and happiness
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Himayat Jan 18, 2023 03:02pm
There is no solution but revamp our whole financial system and make bold decisions and specially political stability is must. Also we need to just stop corruption for the sake of this country for few years and rebuild it by less consumption of petroleum products focus on our agriculture for self dependability make peace with india so we can reduce spending on defence. Focus on water storage and hydro power solar and air power we have largest reserves of coal so we can use that for awhile (environmental issues). Strick polices needed for our future. Loans are not the way out for us as it will start falling all together oneday
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