Pakistan (Commonwealth) _ Pakistan is presently figuring out the specifics of potential fuel price deregulation. At the moment, the government sets the fuel prices every two weeks. Deregulation, however, would imply that the government would no longer have direct control over pricing, ending petroleum politics.
In Pakistan, there are several foreign oil corporations doing business. Deregulation would result in more profitability and improved anti-smuggling measures if it were to proceed.
Pakistan is now experiencing a financial crisis brought on by inflation and other issues. The goal of the government’s efforts to stabilize the oil market is to both help consumers and draw in foreign investment.
Pakistani fuel costs are influenced by global oil prices. When they fall, the current administration claims to have given the public cheaper fuel. The same administration ascribes price increases when they occur to the global oil market.
Since market players are frequently compelled to take drastic steps to safeguard their businesses, no government attempts to improve market efficiency.
For example, a lot of businesses operating along the country’s western border do so in the midst of a sizable illegal market where gasoline is smuggled from Afghanistan and Iran. Because this gasoline is less expensive and exempt from taxes, it benefits both purchasers and sellers, which hurts regulated oil corporations’ bottom lines.
The goal of deregulation is to level the playing field for all parties involved in the market. This is how it may benefit foreign businesses that do business in Pakistan.
Reducing political interference and loosening regulations will probably entice multinational companies to upgrade their infrastructure in Pakistan. The political sway over every economic sector in Pakistan has traditionally made foreign businessmen wary of making investments. While some businesses gain from this, others experience a decline in sales.
Businesses will be able to thrive on improved business operations rather than their political ties in a more competitive market.
By establishing connections that can endure for years, the move will also assist these corporations in establishing long-term objectives in the nation. These collaborations, free from political meddling, have the capacity to endure, which will increase the industry’s stability.
Companies’ supply chains will be better managed by them if they have a competitive pricing system. gasoline consumption in Pakistan, the fifth-largest country in the world, is rather high and mostly depends on gasoline imports. The nation now has more access to oil and will be able to reap large benefits from it.
Although the public may not benefit from the decision, oil firms stand to gain from it. They won’t necessarily pay more as a result of this than they do presently. How successfully this new policy is executed is the sole outstanding question. Government policies in the nation are subject to sudden changes, and it will take some time for them to iron out the specifics of this decision.
Pakistan’s economy is expanding extremely steadily, which is placing a great deal of strain on the nation’s limited energy resources by driving up energy consumption. Pakistan’s energy sector includes coal, gas, electricity, and petroleum.
Pakistan must import a significant amount of oil and goods connected to oil since the country’s oil and gas reserves are limited. This is necessary to meet the country’s increasing domestic demand for oil.
The nation’s needs for gas and oil are satisfied by its around 45 rigs. In contrast to the need for 9–10 bcfd of gas and 77,000 bpd of oil, local output is 4 billion cubic feet per day (bcfd) of gas and 37,000 barrels per day (bpd) of oil.
Currently, the industry is dominated by about four main national oil companies: Pakistan Petroleum Limited (PPL), Pakistan State Oil Company Limited (PSO), Pakistan Oilfields Limited (POL), and Oil and Gas Development Corporation Limited (OGDCL). These four businesses are all partnerships and joint ventures involving various foreign corporations and some domestic businesses.
With a combined market value of PKR 765 billion, these four publicly traded firms account for 22.5% of the weight in the KSE-100 index. At the moment, the nation’s leading foreign oil corporations are Orient Petroleum (Canada), ENI (Italy), OMV (Austria), and BP (UK).
