Govt eager to adopt risk hedging for oil, petroleum products

ISLAMABAD: Finance minister on Tuesday hoped that the embattled government has enough reform zeal to allow oil options trade and hedge more of its fuel needs further into the future, though fears of anti graft body undermines any such move.

Shaukat Tarin, Minister for Finance emphasised upon the importance of adopting risk hedging to dampen the impact of recent fluctuations in global prices of crude oil.

Tarin held a meeting with the Hammad Azhar, Minister for Energy, and Special Assistant to PM on Power and Petroleum, Tabish Gauhar to review rising energy prices.

Prices of petroleum products in the international market had witnessed a nosedive of $11 per barrel last month, which was why the government was discussing the possibility of hedging of prices.

However, the bureaucracy showed reluctance to move ahead on the basis of persistent fears that what would happen if the projected prices reduced further in the international market forcing them to face unwarranted accountability.

When Tarin served as finance minister during the Pakistan Peoples’ Party led government in 2009-10, the possibility of hedging of oil prices was considered but it never materialised.

This time too, the idea was expected to remain a pipe dream due to the massive political polarisation.

Minister Tarin urged to adopt forward planning while dealing with the volatile energy prices in international markets.

"He also emphasised the importance of risk hedging to dampen the impact of recent fluctuations in global prices of crude oil and petroleum products particularly due to supply side disruptions amid the Covid-19 pandemic," a government statement said.

The minister stressed upon exploring cost-effective options such as renewable sources of energy for a sustainable energy equation by reducing reliance on expensive power producing plants in order to make the energy sector dynamic and sustainable.

Energy minister brief the meeting about growing demand for energy, installed generation capacity, and transmission capability, while also outlining the steps being taken for improving transmission and distribution systems for reducing costs and ensuring sustainability.

Finance minister said the present government was cognizant of its obligation to fulfil energy requirements at affordable rates for electricity consumers. "To this end, the government is taking all possible measures to meet future energy demands," he said, assuring of full support and facilitation to the energy sector.