Pakistan's oil industry on verge of 'collapse' amid reeling economic crisis

Islamabad [Pakistan], February 3 (ANI): The oil companies of Pakistan are on the verge of 'collapse' due to a reeling economic crisis and devaluation of the currency, Geo News reported.
The Oil Companies Advisory Council (OCAC) in a letter to the Oil and Gas Regulatory Authority (OGRA) and Energy Ministry, wrote about the "depreciation" of the local rupee which has affected a lot of businesses in the South Asian country, drastically.
It has led to a loss worth billions of rupees to the industry as their letters of credit (LCs) are expected to be settled on the new rates, "whereas the related product has already been sold," Geo News reported.
The government has also limited LCs due to depleting foreign exchange reserves, which dipped to USD 3,086.2 million on January 27 and are only enough for 18.5 days.
According to Geo News, in the letter, OGRA has embraced the practice of not completely passing on the impact of rupee devaluation, instead imposing a massive burden on the sector.
Pakistan is experiencing a balance of payments problem, and the falling value of the rupee is raising the cost of imported commodities.
Energy accounts for a sizable portion of Pakistan's import bill. Pakistan normally satisfies more than a third of its yearly power demand with imported natural gas, the price of which has risen since Russia's invasion of Ukraine.
Moreover, amid persistent inflationary pressures, goods remain out of people's range, whose purchasing power has already hit rock bottom.
The World Bank in earlier weeks of January slashed Pakistan's economic growth by half -- from 4 per cent to 2 per cent for the current fiscal year, saying that Islamabad faces mounting economic difficulties, reported The News International.
"Nonetheless, Pakistan faces mounting economic difficulties and Sri Lanka remains in crisis. In all regions, improvements in living standards over the half-decade to 2024 are expected to be slower than from 2010-19," read the World Bank in Global Economic Prospects report.
Pakistan's economic condition is precarious with low foreign exchange reserves and large fiscal and current account deficits. (ANI)