Pakistan Faces Fuel Crisis Amid Economic Crunch

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Pakistan‘s oil reserves are running low, and the petroleum it purchases is being smuggled into Afghanistan, despite the fact that its “informal trade” in oil with Iran, another neighbour, is booming, reported Asian Lite International.

A net importer of oil, it has been able to fend off the fuel crisis because industry demand has decreased over the past year. Because it hasn’t had the money to pay for the accessories it imports, the sector has slowed considerably. One of its main sources of income, textile production and exports, have decreased.

A report publised in Asian Lite International read, analysts point out that this unfavourable circumstance is a result of poor foreign policy decisions that were taken in the midst of domestic political unrest and an economic crisis.

Pakistan is a net loser in fuel oil imports at a time when the Ukraine conflict has made the situation worse for most economies worldwide. It did not help that, despite American warnings, its former prime minister Imran Khan was in Moscow last year on the day that Ukraine was attacked. After Khan was removed from government, the Americans were dissatisfied, and the Soviets were hungry for money, Pakistan was unable to play the victim card as it was cash-strapped.

Even worse, Pakistan has been unable to obtain waivers from the coalition led by the United States that is engaged in a proxy war with Russia, unlike Saudi Arabia, India, and Turkey.

These nations were able to stand up for their foreign policy goals despite US laws like the Countering American Adversaries Through Sanctions Act (CAATSA).

Pakistan is a net energy importer and has a sizable population. It has relied on other Gulf countries rather than Iran, a significant oil producer, for reasons that are still not apparent. Experts suggest that it may be due to its emphasis on the Sunni Gulf states while downplaying Shia Iran. Although sharing a physical border, relations between Pakistan and Iran have remained tepid. It suggests that either Pakistan’s and Iran’s long-term foreign policy objectives have not yet coincided or that Iran is still Pakistan’s secondary concern, according to Asian Lite International.

Changes were sought through a recent trip to Iran by foreign minister Bilawal Bhutto Zardari, during which the two countries discussed the operationalisation of border food markets and barter commerce.

On this front, there is a potential irritant as well. Pakistan is being sued by a disgruntled Iran for neglecting to build infrastructure for the Iran-Pakistan (IP) Pipeline on its soil. The project has remained a pipe dream and, at the worst possible time, is simply making matters worse.

Citing a report of The Express Tribune which quoted officials, Asian Lite International reported, Pakistan faces a new legal threat on this matter valued USD 18 billion. Periodic agreements have been made under the 2009 intergovernmental framework.

A third agreement was signed in Turkey in August 2019 between Iran and Pakistan, mandating the completion of the pipeline project by 2024 and Pakistan’s purchase of 750MMCFD (million cubic feet per day) of Iranian gas produced from the Farzad gas field.

Asian Lite International also cited a report of Pakistan Today-Profit, that if Pakistan did not uphold its end of the bargain, Iran might bring a lawsuit and assert claims in a French international court.

A National Assembly Standing Committee on Foreign Affairs also urged the administration to move the pipeline project forward.

If gas can flow from Pakistan to other South Asian economies, transnational gas projects can be successful. Pakistan is a default partner in any energy drain project in the post-colonial republics of Asia due to its antagonistic relations with India, a significant gas consumer, and the transit character of Pakistan’s geography. Pakistan does have options, but they are limited by its ability to finance and maintain projects at the rate demanded by partners.

Pakistan’s present petroleum situation is still precarious overall and is unlikely to get much better very soon, Asian Lite International reported.

Source: Economic Times Auto