Shehbaz Govt under
tremendous pressure
haunted by circular
debt and oil crisis

0
17

ISLAMABAD: The new Prime Minister of Pakistan Shehbaz Sharif is under tremendous pressure due to surging oil prices caused by the Russia-Ukraine conflict and is haunted by the circular debt crisis.
If the new government maintains the freeze on petroleum prices, another circular debt crisis may erupt in the country. However, if it raises oil prices, the decision will immediately hurt the popularity of the new government, reported The Express Tribune. At present, energy companies are facing financial constraints and are struggling to get their outstanding dues cleared. Oil and gas sectors are reeling from Rs 1.6 trillion worth of circular debt whereas the power sector has a circular debt close to Rs 2.5 trillion, said the officials.
Apart from the circular debt woes, price differential claims of billions of rupees are emerging because of the freeze on oil price revision while in the international market crude oil has risen to multi-year highs, reported The Express Tribune.

ISLAMABAD: Prime Minister Shahbaz Sharif is coming to office early 7am on Tuesday.

Already, the consumers in Pakistan are paying record high prices of petroleum products. Former prime minister Imran Khan announced a relief package on February 28, 2022 including a reduction of Rs 10 per litre in the consumer prices of motor spirit (petrol) and diesel and a promise to keep prices unchanged by the end of current fiscal year in June 2022.
The decision included payment of subsidy to oil marketing companies (OMCs) and refineries in the form of price differential claims.
Subsequently, allocation of Rs 20 billion and Rs 11.73 billion through a supplementary grant was approved by the Economic Coordination Committee (ECC) on March 7 and 15, 2022 for the payment of price differential claims for the period November 1 to 4, 2021 and March 1 to 31, 2022. These decisions were ratified by the federal cabinet.
As per assessment of the Oil and Gas Regulatory Authority (OGRA), the allocated amount will be sufficient to cover the price differential claims for March 19 to 31, 2022.
Later, Ogra pointed out that due to the rising oil prices in the international market, the price differential claims for the first fortnight of April 2022 was projected at Rs 26.47 billion and for the whole month they were estimated at Rs 53-55 billion, reported The Express Tribune.
International energy markets have remained volatile and motor spirit and diesel premiums remain high. As a result, the liquidity position of Oil Marketing Companies (OMCs) and refineries is under stress. Subsidised prices of petroleum products add to the stress as the full cost recovery is made only when price differential claims are processed after a lag of almost one month.
OCAC, in a letter to the Petroleum Division, said that the situation remained complex and stressful with the price differential claims soaring due to the rising crude oil prices on the back of the Russia-Ukraine conflict and the strengthening US dollar.
Now, the question arises of whether the new government will be able to tackle these issues. The answer may be difficult as oil prices stay high in the global market.

Economic meeting

A day after taking oath of office, Prime Minister Shehbaz Sharif on Tuesday summoned an urgent meeting of economic experts to discuss the current financial challenges facing the country.

ISLAMABAD: Former President Asif Ali Zardari, PPP Chairman Bilawal Bhutto Zardari, Rana Sanaullah and Saad Rafique meeting with Prime Minister Shahbaz Sharif on Tuesday.

Shehbaz was elected the 23rd prime minister of Pakistan on Monday after his predecessor, Imran Khan, was removed from office through a no-confidence vote on Sunday.

Assuming his responsibilities, the prime minister presided over a meeting attended by prominent economists and deliberated on ways and means to find a solution for the country’s financial stability.

PM Shehbaz issued directives for formulating financial proposals on an emergency basis to address the current economic situation in the country. The proposals would be devised in line with consultation with stakeholders in areas including agriculture, trade, investment, and banking.

A summit would also be held in the next few days to discuss the suggestions of the economic experts.

The prime minister additionally decided to form a National Economic Advisory Council to be comprised of independent financial experts.

Assuming office at PMO

Earlier in the day, the premier arrived at the Prime Minister’s House where he was presented with a guard of honour. He reviewed the guard of honour as the contingents of the armed forces presented a salute to him and was introduced to the officials and staff of the PM House.

Shehbaz assumed his responsibilities at the Prime Minister’s Office at 8am — much earlier than the Ramazan working hours of 10am — and said he did not want to waste an iota of time without serving the masses, according to state-run Associated Press of Pakistan.

ISLAMABAD: PDM Head Maulana Fazlur Rehman and other JUI leaders meeting Prime Minister Shahbaz Sharif on Tuesday.

He termed diligence, honesty, and transparency as his guiding principles and said serving the people of Pakistan was his topmost priority.

During an interaction with his staff, the prime minister directed the officials to get into action for robust performance.

He ordered a single weekly off for public departments instead of the earlier two days. Also, public offices would from now onwards open at 8am.

Soon after assuming office, PM Shehbaz issued directives to ensure relief for the masses, including the provision of low-cost edible items at Sasta bazaars, and also stressed its strict monitoring.

He said he would not tolerate any irresponsibility in ensuring the provision of inexpensive commodities to the general public.

The premier also ordered the officials concerned to ensure early implementation of his decisions announced in the National Assembly on Monday regarding the 10 per cent increase in pensions and fixing the minimum wages at Rs 25,000.