Pakistan is finding it difficult to obtain diesel from international markets due to a supply crunch created by the Russia-Ukraine conflict, reported Bloomberg.
While merchants are exploring avenues to import diesel from Europe, Pakistan State Oil (PSO) is struggling to stock additional diesel from its key source, Kuwait Petroleum Corp (KPC).
It had sought extra diesel from KPC and purchased cargoes on the spot market, according to a spokesman for the retailer. The spokesperson told Bloomberg that the “product is flowing west,” and there is a need to diversify foreign sources due to the challenges.
While its term supplies are unaffected, the state-owned retailer purchased a diesel cargo scheduled to load this month on the spot market for nearly three times the price of its agreed-upon term contract. Also, a purchase tender for an April-loading shipment received no bids, according to the merchants.
Government figures revealed that the country’s energy bills have multiplied to $12 billion from July to January in the ongoing fiscal year. The Oil and Gas Regulatory Authority (OGRA) has requested PSO to purchase fuel for the country’s private retailers for the next three months as rising costs are making it difficult to break even.
Pakistan’s problems are aggravated by a global shortage of industrial and transportation fuel, which have worsened by Russia’s invasion of Ukraine. It is putting additional strain on the government’s budget after Prime Minister Imran Khan slashed domestic fuel and energy costs at the beginning of March, despite making inverse commitments with the International Monetary Fund (IMF) last month.
Pakistan’s fuel and petroleum inventories now exceed one month’s demand — the highest level in many years, according to a tweet by the Minister for Energy, Hammad Azhar, this week.