Govt mulls reduced working days to save fuel

ISLAMABAD: Amid rising oil consumption and import bill owing to higher international prices, the government is examining the possibility of fuel conservation through reduced working days a week. It hopes to save an estimated annual foreign exchange of up to $2.7 billion.

The estimates are based on three different scenarios in terms of working days and fuel conservation prepared by the State Bank of Pakistan for foreign exchange saving of $1.5bn to 2.7bn.

Pakistan’s total oil import during the first 10 months (July-April) of the current fiscal year (FY22) has gone beyond $17bn, showing a massive 96pc growth compared to the same period last fiscal year. This includes import of petroleum products worth $8.5bn and petroleum crude of $4.2bn, showing 121pc and 75pc surge, respectively.

This increase is not solely because of international price hike as the import quantities of petroleum products and crude have also increased by 24pc and 1.36pc, respectively. Ironically, local refineries during the period (July-April) operated sub-optimally, as evident from a minor increase in crude import and a substantial surge in petroleum products, again with higher import cost.

A senior government official said the relevant authorities — power and petroleum divisions — had been advised to come up with their estimates also including electricity conservation to take up the matter in a holistic manner with cost benefit analysis of various sectors before reaching a conclusion.

He said the central bank’s estimation mostly covered POL (petroleum products) consumption in normal working days a week, including retail business and government offices and educational institutions, which in any case would be on summer holidays. It did not take into account LNG imports which mostly go into the power sector. During the first 10 months of the current fiscal year, LNG imports amounted to $3.7bn, showing an increase of 83pc, though import quantities were on the lower side.

These estimates suggest that additional POL consumption for one more working day a week would cost the nation about $642 million in terms of commuting, which do not include freight and transportation. Conversely, reduced consumption with one less working day a week provides an annual saving of about $2.1bn. All saving numbers are taken for net reduction in oil import but subsidy on petroleum products could also come down by Rs3.5bn per day.

In the first case based on four working days and three holidays in which retail is open like a weekend, the average POL saving is estimated at $122m a month or $1.5bn a year. It may be noted that 90pc of oil consumption is assumed for working days and the remaining 10pc for holiday in a month.

In the second case based on four working days, two holidays and one day of lockdown (retail to remain closed for one day), the saving in the shape of reduced oil import is estimated at $175m a month or $2.1bn a year.

In the third scenario based on four working days, one holiday and two days of lockdown (commercial activities to remain off for two days), the POL saving in import bill could be around $230m or about $2.7bn. This case, however, is considered too harsh as it could negatively affect public confidence.

Officials said the Power Division had advised the new government soon after it came to office to go for reduced working days and limit commercial activities to daylight and launch a national energy conservation drive across the energy consumption sectors with electricity saving of more than 5000MW.

Prime Minister Shehbaz Sharif chose instead to increase working days from five to six a week that had an additional burden in the shape of higher electricity and POL consumption.

Interestingly, the power shortfall currently hovers between 5000 and 7000MW, resulting in loadshedding of up to three hours in major urban centres, an official said, adding that a gap of 3000-3500MW could be easily parked in low revenue, high loss areas with manageable public outcry.

Published in Dawn, May 23rd, 2022