Pakistan minister says Gulf attacks worry energy outlook

Pakistan's finance minister Muhammad Aurangzeb said attacks on energy infrastructure in Saudi Arabia and other Gulf countries were worrying for Pakistan's longer-term economic outlook, even though the country had so far avoided shortages from higher energy prices.

Speaking on the sidelines of the IMF-World Bank Annual Meetings in Bangkok, Aurangzeb said Pakistan had procured enough energy supplies to last through November and was planning for the winter months, when household demand usually rises.

“The first-order impact has been negotiated well by Pakistan,” he said. He said there had been no shortages, fuel station queues or law and order problems.

Aurangzeb said Pakistan would not buy spot LNG cargoes unless the government saw “an absolute dire need”, because those shipments tend to be more expensive than previously contracted supplies.

Energy prices have risen since the United States and Israel launched the war on Iran in February, with Tehran's retaliatory actions targeting Washington's Gulf allies and curtailing oil and gas supplies. Yemen's Houthis have also repeatedly attacked Saudi infrastructure, including energy facilities and airports, in recent days.

Aurangzeb said damage to infrastructure could delay a return to economic normalcy even if the fighting eased.

Pakistan is in its 25th programme with the International Monetary Fund since independence, with the current programme worth about $7 billion over three years. The Fund reached an agreement this month to release a $1.2 billion tranche.

Aurangzeb said Pakistan had been pursuing fiscal consolidation and was targeting businesses that collect sales tax from consumers but do not deposit it in government accounts. He said such theft amounted to billions of dollars and that there was also room to improve income tax collection.

He said reform efforts had faced resistance from industry, lobbying groups and vested interests. Asked about military-run commercial companies, Aurangzeb said they were profitable on their own and were not receiving money from the exchequer.