Country to save $18/bbl on import of Russian crude: FPCCI

KARACHI: President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Irfan Iqbal Sheikh has echoed delight and joy of the country’s entire business and trade community over Pakistan’s first order for comparatively cheap Russian crude because as per the prevalent rates the move will translate into a saving of up to $18 per barrel or up to 30 percent.

He expressed the hope that the first cargo of Russian crude will arrive at the Karachi port in May 2023. It makes economic sense to only import crude as three big refineries in the country have the capacity to refine crude oil.

Irfan Sheikh also expressed satisfaction that the government wants to gradually increase the total import of Russian crude to 100,000 barrels per day.

However, this will take some bold steps from the economic and energy team, such as resolution of teething problems in shipping and logistics sector and streamlining of the commercial transactional procedures because 100,000 bpd will be a big number for Pakistan. The country imported at a rate of 154,000 bpd in the year 2022.

He explained that this single step – although it has come after a lot of procrastination despite repeated demands of the business community — will take some burden off Pakistan’s foreign exchange reserves, balance of payments, trade deficit and soaring inflation, as import of petroleum is the single largest category in the country’s total import bill.

The FPCCI chief said that time and again the business community has proven that it supports any geo-economic or geo-strategic decision that is in national interest. Many countries in the world are importing Russian crude on discounted rates, including some friendly ones that boast large economies.

Additionally, the move doesn’t violate any international law, treaty or sanctions. As far as the regional counties go, both India and China are major importers of Russian oil, he said.

He was of the opinion that enhancements in the import of Russian crude should be taken up in a phased manner so that they are sustainable, steady and incremental. To top it all the downward price differentials should be passed on to the business community and the general public swiftly and efficiently to effectively break the unending double whammy of recessionary and inflationary pressures that have been plaguing the economy for the past 12-18 months.

This is a golden opportunity for the government to utilise this avenue to reduce cost of doing business in Pakistan to some extent, allow LCs to settle smoothly through reduced pressure on dollar reserves, curtail prices of essential commodities through shrinking transportation costs, stabilise rupee-dollar parity and provide some much-needed interim relief to the masses.

Copyright Business Recorder, 2023