Energy pressures intensify as fuel costs surge

ISLAMABAD: Pakistan is facing growing pressure on its energy sector as disruptions to key regional shipping routes push international fuel prices higher and raise concerns over supplies and electricity generation.

Federal ministers on Tuesday said the government was closely monitoring the situation and had taken measures to limit the impact of the global energy shock. They said greater reliance on domestic resources had helped the country avoid a more serious power crisis.

Climate Change Minister Musadik Malik said international crude oil prices had crossed the $100-per-barrel mark again. He linked the recent increase in domestic petrol prices to the continued rise in global oil prices and the ongoing conflict in the Middle East.

He said the government was trying to share part of the additional burden with vulnerable consumers through the Prime Minister’s Fuel Relief Scheme. Under the programme, motorcyclists will receive relief on five litres of petrol every week, while car owners will be eligible for relief on 10 litres every 10 days.

Malik said the government was providing Rs100 relief per litre under the scheme. He acknowledged that the assistance would not completely offset the impact of higher fuel prices, but said the amount represented the maximum relief the economy could currently sustain.

The minister said the programme could provide meaningful support to low-income households. He cited delivery riders and families dependent on small vehicles as examples of people facing higher fuel costs while maintaining the same daily travel requirements.

Meanwhile, Energy Minister Sardar Awais Ahmad Khan Leghari said Pakistan had managed to maintain electricity generation despite disruptions affecting imported fuel supplies.

He said domestic sources accounted for 72 per cent of the country’s electricity generation in August. Hydropower contributed 38 per cent, followed by local coal at 11 per cent, nuclear energy at 10 per cent, local gas at 7 per cent, wind at 6 per cent and solar power at 1 per cent. Imported coal and RLNG accounted for the remaining 28 per cent.

Leghari said disruptions in the RLNG supply chain had pushed spot cargo prices to around $23.25 per MMBtu. He added that additional domestic gas arranged for the power sector helped reduce the need for expensive imported fuel.

According to the minister, without the additional domestic gas, the country could have faced another hour of load shedding. Greater reliance on furnace oil or imported RLNG could also have added around Rs10.6 billion to consumer electricity costs.

The government has also accelerated the rollout of the Fuel Relief Scheme. A national steering committee directed that payments to participating fuel stations be processed within 24 hours. Provinces were also asked to complete district-level arrangements so eligible consumers could receive the relief without disruption.

The scheme, which was initially tested in Islamabad, is scheduled to expand nationwide from midnight.

Meanwhile, the sharp rise in petrol and diesel prices has triggered speculation about the possible return of austerity measures and restrictions on business hours. Ministers, however, rejected reports that a new “smart lockdown” was being considered.