Energy Imports Decrease by 13% to $1.42 Billion in November
Published on: December 22, 2023.
Filed under:
Pakistan’s Energy Imports Decline as Demand for Petroleum and Gas Products Slows
Pakistan witnessed a 13% decrease in energy imports, totaling $1.42 billion in November 2023. This decline highlighted subdued demand for petroleum, oil, and gas products, which can be attributed to sluggish economic growth and increased product prices impacting purchasing power across various sectors.
To explore more export opportunities, refineries in Pakistan started exporting furnace oil, which allowed them to import larger quantities of crude oil. This, in turn, enabled them to produce premium products like petrol and diesel.
Declining Refined Product Imports and Increasing Crude Oil Imports
According to the Pakistan Bureau of Statistics (PBS), imports of refined products decreased by 29% to $499 million in November compared to $708 million in the same period last year. In contrast, crude oil imports increased by 4% to $566 million.
The import of Re-gasified Liquefied Natural Gas (RLNG) experienced a 9% decrease, amounting to $290 million. This decline can be attributed to elevated international prices and the country’s diminishing foreign exchange reserves.
Impact on Industries
Industries, including the textile sector, were reluctant to purchase expensive imported gas due to rising costs, which made it economically unviable for sustaining factory operations and overall economic activities.
According to analysts, the decline in energy imports can be attributed to slow economic activities and the withdrawal of subsidies on petroleum and gas products, significantly impacting the purchasing power of a large section of society.
Challenges in the Energy Sector
The sluggishness in economic activities was evident in large-scale manufacturing (LSM) industries, coupled with a 33-month low in electricity production in November.
Experts predict that energy imports and demand for related products will continue to remain subdued throughout the current fiscal year due to the caretaker government’s focus on implementing stringent International Monetary Fund (IMF) conditions.
Petroleum Exports Surge
Pakistan’s petroleum product exports saw a significant surge, reaching $44 million in November. This marks a 512% increase from the corresponding month last year.
Leading refineries such as Pak-Arab Refinery (PARCO) and Pakistan Refinery (PRL) played a significant role in exporting furnace oil among the five operational refineries in the country.
Outlook for Energy Imports and Future Growth
Experts anticipate that energy imports and demand for related products will remain subdued throughout the current fiscal year. However, following the February 2024 elections, analysts believe that the next elected government may implement initiatives to boost economic growth, potentially increasing demand for energy products in late FY24 or early FY25.
In the first five months of the current fiscal year, cumulative energy imports saw a 16% decline, amounting to $6.45 billion compared to $7.70 billion in the same period of the previous year.
Source: The Express Tribune
