Pakistan's Fuel Crisis Might Cost PM Sharif His Government

Pakistan' citizens are clueless about what's driving the fuel crisis in the country. They're uninterested in hardcore economic issues. They need is petrol and gas, and they hold PM Sharif responsible for the shortage.

"We read in the newspapers that oil prices had gone down all over the world. But in Pakistan, we have no petrol, and the scant amount that we manage to get is still too costly," Ali Reza, a salesman for a pharmaceutical company in Pakistan's southern city of Karachi, told DW.



The common people in the country have no clue about world economics, the rise and fall of oil prices in the international market, and geopolitics; they squarely blame the current fuel crisis on Prime Minister Nawaz Sharif's government.



The country, which boasts of its nuclear arms and military prowess, has been facing an acute energy crisis for the past five years, which has severely strangled its economic growth. The power shortage has crippled the Islamic country's industrial sector, and the regular "load-shedding" of electricity in the cities have prompted people to take to the streets and protest against the authorities.



The situation became worse over the weekend when armed separatists in the country's western Balochistan province blew up a key power grid, which plunged around 80 percent of the South Asian country into darkness.



Despite the fact that PM Sharif promised to fix the energy sector during the run up to parliamentary elections in May 2013, his government has so far not delivered on its pledges.



People are getting increasingly frustrated by the day, and ask how long will the government take to tackle the issue? Is it a matter of willingness to resolve the problem, of sheer incompetence, or both?



What's causing the crisis?



"The short-term solution is for the government to find a way to solve the State Oil Company's financial problems, either through direct recapitalization or by coaxing the State Oil Company's debtors to pay up. But the structural issues, those related to the government's price controls and the consistent failure of energy customers to pay up, will take longer to resolve," Daniel Martin, a senior Asia economist at Capital Economics, told DW.



The main issue is that Pakistan State Oil, which supplies around 80 percent of the country's fuel, has run out of money and banks have refused to extend it any more credit, the expert added.



"The government's price controls make it impossible for many firms in the energy and utilities sector to break even, especially since their customers often fail to pay their bills. These firms then struggle to pay their own suppliers, such as Pakistan State Oil. In this latest case, the Power and Water Ministry has failed to pay Pakistan State Oil an outstanding debt of 171 billion rupees, which would have been enough for about two months of oil imports," Martin said.



Simmering anger



Muhammad Hanif, manager of a gas station in the capital Islamabad, told DW that people began to consume more petrol after the reduction in global and domestic fuel prices, and that they were unable to meet the demands due to petrol shortage.



"People come to us and fight as if we are storing the petrol to keep the prices up. We tell them to look at the fuel tanks which have been empty and dry for quite some time," he said.



Abdul Sami Khan, chairman of Pakistan Petroleum Dealers Association, blamed the ministry of energy and the oil distributing companies for the crisis. "The government's departments and ministers are holding each other responsible (for the crisis). The people are suffering," he said.



Political implications



Martin says the energy crisis is frustrating the public, but there is no short-term solution to resolving it: "The crisis has hit the transport sector hard, making it very difficult for firms in other sectors to move their goods around. There have also been electricity shortages, which have been added to by the failure of a power transmission line that cut power to 80 percent of the country over the weekend. But the fact is that Pakistan's power network consistently falls short of the country's needs. It isn't a short term problem."



Experts say the situation could be damaging for Sharif who is already facing multiple political crises. The opposition Tehreek-e-Insaaf (PTI) party - led by former cricket star Imran Khan - has been holding nationwide anti-government protests for months. They PTI and its supporters not only claim that Sharif came into power by rigging general elections but that the PM is also incompetent and corrupt.



If the government fails to resolve the crisis soon and initiate long-term programs to fix the energy problem, the opposition's call for Sharif's resignation will likely gain more momentum in the days to come.



"Sharif's ministers are corrupt to the core. I have never seen a worst government than the present one. They call (Sharif and his family) themselves businessmen and industrialists, yet they can't run the economy. If they can't solve the problem, they should better quit before the masses throw them out of power," Reza added.