After the purchase of Russian oil, would the price of fuel in Pakistan decrease by $100?
Amidst the widespread excitement surrounding Russian oil, the primary concern on every Pakistani’s mind is the impact that imported oil will have on the exorbitant fuel prices. Minister for Planning, Development, and Special Initiatives, Ahsan Iqbal, recently addressed this question in an interview with Voice of America (Urdu).
When asked whether the price of petrol, which had reached an all-time high of Rs282 per liter and currently stands at Rs272 per liter, would decrease by Rs100 once Russian oil reached Pakistan, the minister responded negatively.
He stated that there might not be a significant difference initially. However, he added that the price would certainly reduce once Pakistan began importing large quantities of Russian oil.
Iqbal explained that although the initial quantity of imported oil would be small, it would gradually increase over six months to a year. This expansion in imports would eventually contribute to a reduction in petrol prices, according to the minister.
Negotiations between Pakistan and Russia had been ongoing for months before they reached an agreement in April. State Minister for Petroleum, Mussadik Malik, had previously stated that the first shipment of Russian oil was expected to arrive at the Karachi port in late May. If the initial transaction proceeded smoothly, Pakistan aimed to import 100,000 barrels per day (bpd) of Russian crude oil, as outlined by Malik.
The Pakistan Refinery Limited (PRL) would initially refine the crude oil in a trial run, followed by Pak-Arab Refinery Limited (PARCO) and other refineries in the future.
In a recent announcement, Malik disclosed that Pakistan intends to import one-third of its total crude oil requirements from Russia. The government has finalized a comprehensive energy security agreement with Russia, covering various aspects of energy supply within the country.
Malik emphasized the desire to establish an energy corridor with Central Asia, similar to the one existing with Gulf countries. This initiative aims to decrease the cost of energy in Pakistan, facilitate the development of industrial clusters, and add value to the agriculture sector, he explained.
The minister further revealed that the government’s objective is to import 18-20% of the country’s total crude oil imports from Russia. This strategic move is expected to significantly lower petroleum product prices for domestic consumers.