According to Yahoo!Singapore News:

SINGAPORE : Households and businesses in Singapore will have to pay more for electricity from next year.

SP Services said tariffs will be going up from the first quarter of 2008.

A statement released on Wednesday showed that the new rates will hit a six—year high for households and small businesses.

SP Services attributed the higher cost of electricity to higher fuel prices.

On average, the tariffs will go up by 5.94 percent. This translates into an increase of about S$1.30 in the monthly bill of households staying in one—room flats.

Residents of 5—room flat units are likely to pay about S$5.50 more each month.

The rates are reviewed and adjusted according to fluctuating electricity costs every quarter, and they have been approved by industry regulator, the Energy Market Authority

According to The Straits Times:

Fuel prices drive up electricity tariffs

FROM next month, electricity tariffs will go up nearly 6 per cent, to 22.62 cents per kilowatt-hour (kwh).

This is the highest price hike since 2001. The revision is the result of soaring fuel prices, said Singapore Power which released the January to March tariff on Wednesday.

The 1.24 cents per kwh increase works out to between $1.30 and $5.50 a month for one- to five-room HDB flats.

Between Jan 1 and March 31 next year, Singapore Power expects fuel prices to go up by some 10.5 per cent, from $87.46 per barrel to $96.64 (US$66.28) a barrel.

Electricity prices are adjusted every three months. The last increase was made for the October-to-December quarter where electricity costs went up between $1 to $4.20 a month for one- to five-room HDB flats.

Members of Parliament The Straits Times spoke to agreed that with the rising fuel oil prices, the electricity tariff hike is inevitable.

Dr Lily Neo, an MP for Jalan Besar GRC, said lower-income families and the elderly ‘will definitely feel the pinch’.

She noted: ‘Already, many don’t switch on the lights at night to save the extra few cents. What we can do is offer financial help such as NTUC vouchers and food and grocery vouchers to tide them over.’

Read the full story in Thursday’s edition of The Straits Times.

At www.spservices.com.sg, you can read all their latest news release at the news room.

Download the PDF News Release for 26 December 2007.

For 22.62 cents per kilowatt-hour new tariff means for every kilowatt-hour electricity used you pay 22.62 cents.

The National Average consumption of electricity is 393kWh which means average bills paying right now for most Singaporeans is 393 x 22.62 cents = $88.90 excluding water, sanitation and GST. Total national average plus everything should around $100 to $150 plus minus depending on how much you use.

Currently the electricity tariff is “regulated” and only changes quarterly (every 3 months) on a back ward revision on the tariff to adjust accordingly base on cost of fuel and demand. If previous 3 months is under-charged then the tariff will hike up and goes down if over-charged.

After 2009, the “Pay-As-You-Use” system will be implemented in a open and deregulated tariff system. They call these new users “Contestable” Users and the tariff will be traded by EMC (Energy Market Company) that will trade electricity base on demand and supply, cost of fuel and other speculative factors.

The benefits of more competition in the open market supposedly should have cheaper electricity tariff ($/kWh) and better services when consumer buy contracts from various licensed electricity retailers like Seraya, Senoko, Keppel , Sembcorp, Tuas and possibly other competitors like Island Power.

The problems is that even with competitive pricing plans much like M1, Starhub and Singtel…you cannot control the cost of fuel to generate electricity which currently uses 80% natural gas and the rest is expensive oil base products like bitumen (Tar Sands) and etc.

Any demand disruption like a black out or oil disruption in the middle east will cause electricity tariff to spike within 30 minutes (the intervals for electricity trading). This will cause unsuspecting users much pain in their pockets if they do not know about the disruption and continued to use the electricity at a much higher cost.

All these might change depending on the pricing plans you might purchase after 2009, there might not be even a “full deregulation” of the electricity market if the initial test of the system fails to provide cheaper prices for household consumers for the beta testers.

Enron Energy marketing company collapsed previously because of rampant trading of electrical tariff and had caused Californians much hardship. The frequent high spikes of electricity tariff caused by disruption of power supply due to frequent forest fire and maintenance of power plants. There are many insider cover ups of losses and other unspecific fraudulent accounting practices that caused the collapsed of Enron but we must not be complacent when following blindly into similar US Style deregulation of electricity market.

Deregulation means no more control from government and it will induce speculating trading and also unseen market forces to “steal and plunder” the money of the people through trading of electricity.

According to Canberra Times:

‘The livelihoods of billions of people will be serious risk that there will be less people able to get access to food‘

Almost 40 countries are facing critical food shortages as world food prices soar to record levels, the United Nations warns.

The world’s food supplies are rapidly dwindling due to crop failures caused by global warming, natural disasters, wars, and a trend away from farming food crops to growing biofuels and grain to feed cattle, the agency says.

The UN Food and Agriculture Organisation’s global food price index reached its highest level this year, rising by more than 40 per cent, compared with 9 per cent last year.

“There is a very serious risk that there will be less people able to get access to food because of prices,” FAO head Jacques Diouf said.

The cost of imported food for the world’s poorest countries has risen by 25 per cent this year to about $US107 billion the highest on record. Countries facing critical food shortages include 20 African countries as well as Iraq, Afghanistan, Nepal and Pakistan.

Food riots caused by shortages and rising prices have also occurred in Mexico, Morocco, Uzbekistan, Yemen and Senegal.

In its monthly analysis of global food prices, the FAO said there had been an unprecedented “hike in world prices of, not just a selected few, but of nearly all, major food and feed commodities“.

Rarely had the world felt such “a widespread and commonly shared concern about food price inflation,” the FAO analysis said. In Australia, food prices have increased by 12percent over the past two years, chiefly because of drought and crop shortages linked to global climate change.

Australian Bureau of Statistics data shows prices for bread and eggs have increased by 17 per cent since 2005, vegetables by 33 per cent, honey by 100 per cent, dairy products by 11percent and fruit by 43 per cent.

A recent report by economist John Quiggin for the Australian Conservation Foundation concluded “price shocks similar to those being experienced by Australian consumers during the currently severe drought may start to occur every two to four years, rather than once a decade, unless strong action is taken to reduce global emissions“.

Quiggin said some practices proposed as strategies to mitigate the impact of climate change such as growing corn and sugar cane for biofuels and the use of forestry plantations as carbon sinks would inevitably contribute to “upward pressure on food prices”.

The impact of biofuels on world food production will be reviewed at a UN conference on food security next year.

It was essential biofuel policies were “coordinated at an international level taking into consideration the objective of fighting hunger,” Diouf said.

Higher meat consumption in emerging market nations across Asia are also driving food price increases.

In 1985, China’s average consumption of meat was of 20kg, but per capita meat consumption had now increased to 50kg, Diouf said. This reduced the amount of grain available because 1kg of beef could take as much as 8kg of grain to produce.
The British medical journal The Lancet recently published a study suggesting a 10 per cent cut in global meat consumption by 2050 would reduce greenhouse emissions from agriculture and also improve health for rich and poor nations.

Agricultural experts have also warned global warming will result in shorter growing seasons and smaller crop yields across most of the developing world, affecting the lives of billions of people. A report by the Consultative Group on International Agricultural Research estimates wheat production in India could drop by 50 per cent within 40 years, putting as many as 200 million people at risk of worsening food shortages.

Growing seasons in many parts of Africa will decrease by 20 per cent, with some of the world’s poorest farming communities in east and central Africa including Rwanda, Burundi, Ethiopia and Eritrea among the worst affected.

“The livelihoods of billions of people in developing countries, particularly those in the tropics, will be severely challenged as crop yields decline due to shorter growing seasons,” International Rice Research Institute director Dr Robert Zeigler said.
The FAO said soaring petroleum prices had contributed to price increases for agricultural crops by raising farm production costs and boosting demand for biofuels.

“The combination of high petroleum prices and the desire to address environmental issues is currently at the forefront of the rapid expansion of the biofuel sector: this is likely to boost demand for feedstocks, most notably, sugar, maize, rapeseed, soybean, palm oil and other oil crops as well as wheat for many more years to come.”

According to the FAO, the amount of corn used for biofuel production in the US will double to 110 million tonnes by 2016. In Europe, the amount of wheat devoted to biofuel will rise twelvefold to 18 million tonnes by the same date.

Earlier this year, Jean Ziegler, the UN’s Special Rapporteur on the Right to Food, denounced biofuels as “a crime against humanity” and called for a five-year moratorium on their production.

- I call those biofuels users “Mass murders, Child Killers, Rich Bastards with no Brains, Sick Bastards, Rich but soon to be starving folks, Idiots, Cancer Cells” and just one level before reaching the “Violent Brain Dead Zombies with hunger never fulfilled”. Yes, you with that ethanol or palm oil vehicles….you the demand for “clean” fuel for transportation that starve the rest of the world.

I cannot put the blame on all user of biofuel but also those idiots they name scientist to come out with a “renewable” source of fuel for vehicles and instead of using electricity powered vehicles they continue to use combustion engines that runs on burning fuels that burst into flames. Biofuel is not really efficient combustible fuel and even not really environmentally friendly too!

Yes, the cost is even higher then oil as you need expensive oil powered machinery to plough, seed, harvest and process these super huge crops and uses huge quantity of expensive natural gas base fertilizers and oil based pesticides to produce a high yield!

Now with higher demand, the farmers are starting to be blinded with greed and prostitute more fertile land for non-edible crops just for making high yield biofuel that will definitely affect the food productions world wide!!

Together with climate changes that created multiple disaster, drought and flash floods causing huge food shortages and many poor nations will be unable to afford any food at all!!

What will happen if food producing countries nationalize their agriculture industry and curb exports to other countries? Or impose huge tax on exports of food? This will cause countries that have zero food production to suffer huge food shortages and serious price hikes!

Time to grow your own food and start fast my friend, food don’t grow overnight!

According to Bloomberg:

Dec. 26 (Bloomberg) — Palm oil prices in Malaysia, the global benchmark, rose to a record today as global demand for vegetable oils for food and alternative fuel outstripped supply.

Oilseeds and vegetable oils are gaining from Chicago to Dalian on concern world inventories are dwindling as demand rises in China and India and governments subsidize the use of edible oils for fuel. Soybeans may lead gains among non-energy commodities next year, according to Goldman Sachs Group Inc.

Soybeans and soybean oil in China, the biggest consumer of the commodity, also soared to records as traders speculated demand may outpace supplies from government stockpile sales and imports. Soybeans in Chicago reached a 34-year peak and soybean oil the highest for at least 33 years on Dec. 24.

“The outlook for the grain, oilseed and vegetable oil markets remains very positive,” Michael Coleman, Singapore- based managing director of Aisling Analytics Pte, which runs a $1 billion commodity hedge fund, said today by e-mail.

“To see significantly lower prices we’ll need a combination of demand rationing and excellent harvests to allow a rebuilding of inventories,” he said. “That probably means significantly higher prices first.”

Palm oil for March delivery rose as much as 57 ringgit, or 1.9 percent, to 3,087 ringgit ($924) a ton on the Malaysia Derivatives Exchange today before closing at 3,080 ringgit a ton.

Supply Shortage

“Palm oil prices have gone up in spite of record-high stockpiles in Malaysia because the market is anticipating tight supply next year,” Alvin Tai, analyst at OSK Research Bhd., said by phone from Kuala Lumpur today.

Palm oil inventories in Malaysia, the second-largest producer of the commodity, climbed 16 percent to a record in November as output reached its highest ever, the Malaysian Palm Oil Board said on Dec. 10.

Agricultural products have been among the best-performing commodities this year. Palm oil has gained 56 percent, soybeans 75 percent and soybean oil 62 percent. Goldman Sachs raised its 12-month forecast for soybeans by 61 percent to $14.50 a bushel from $9 a bushel in a Dec. 11 report.

Soybean oil futures traded on the Dalian Commodity Exchange have risen 40 percent this year. The most-actively traded contract for May delivery gained 200 yuan, or 2 percent, to close at 10,146 yuan ($1,382) a ton.

China, the biggest buyer of vegetable oils, imported 29 percent more of the commodities in the first 11 months of this year compared with a year earlier, customs data showed Dec. 11.

Imports of vegetable oil totaled 7.71 million metric tons from January to November, the Beijing-based customs office said. Palm oil imports gained 7.1 percent in the first 11 months while the country’s imports of soybean oil and canola oil almost doubled and gained eight-fold respectively.

Indonesia and Malaysia produce 90 percent of the world’s palm oil, the main substitute for soybean oil.

- Warning Notice to all low income readers, kindly proceed to back up at least 2 months worth of instant noodles and essential food to prepare for the tsunami of food price hikes. Prediction of this new year food prices will go up in stages and it will come when the “breaking point” comes or the national “signal” to hike food prices comes from government or any national level to signal the mass hike in food prices.

The situation now is desperate for food stalls to keep food prices low to be “competitive” while the hike in cost of raw food materials, utilities and higher rental. The decisions for some stall owners who don’t have deep pockets to wait until the signal to hike food prices will face the fate of closing down businesses and go under big food court names to work for others.

The hike in food prices that I speculate can go as high as $7 to $10 depending on the cost of the raw materials, cooking oil, rental and utilities. The prices had been suppressed for very long for many coffee shops and might be targeted for renovation into modern looking food courts that sells food at much higher prices.

Soon there won’t be any cheap food left in Singapore for the benefit of the low income people, I won’t even want to speculate other countries plight in this new wave of inflation. I personally feel that many will start to save on eating lunch and cook their own food at home however the supermarkets are going to raise their food prices after Chinese New Year and it won’t be pretty.

I almost can feel the pressure between my ears telling me that don’t panic and be happy that we still have jobs and security. Prosperity and growth in a illusion of peace in slavery and hardship does nothing to other countries and there will be chaos in other countries with strikes and protest.

Food export from food producing countries will almost certainly curb exports due to higher domestic demand and soon countries like Singapore may have to grow their own food to sustain the huge population or face the consequences of paying high cost of food. Alternatives to expensive food will slowly diminish from the market and what’s left will be branded and repackaged “quality” food that not everyone can afford.

The rich will push this concern straight to the drains especially those government sectors that have huge pay hike and big fat bonus to cushion the hike “temporarily” but what can we do?

Solutions is to make more high paying jobs to the general public!! It must be fast otherwise there won’t be a peaceful Singapore soon! MRT will have much more disruption due to suicides and more violent robberies in broad daylight!!

This equilibrium of peace and prosperity is non-negotiable and must be enforced strictly but the lives of the poor will not be able to sustain their 3 meals soon!

For those worried, kindly back up periodically 2 weeks to 2 months worth of essential food stuff in case of hoarding at the last minute before the price hike.

According to Livecharts.co.uk

Oil Charts at 10 Seconds interval, 500 Units, Line.

Oil Charts at 1 Minute interval, 500 Units, Line.

Oil Charts at 10 Minutes interval, 500 Units, Line.

As I am writing this blog, the oil prices had shot past US $96 per barrel!!

According to Bloomberg:

Dec. 26 (Bloomberg) — Crude oil rose for a third day in New York on concern shipments from Iraq may be disrupted after the Turkish military attacked bases of Kurdish rebels in northern Iraq.

Turkish planes bombed an area of Iraq near Turkey’s border to attack Kurdish rebels, Agence France-Presse reported yesterday, citing an unidentified Iraqi-Kurdish security official. Iraq exports crude oil through its northern pipeline to Turkey.

“That has made the market nervous,” said Tetsu Emori, a fund manager at Astmax Futures Ltd. in Tokyo. “Geopolitical issues are still out there keeping the upside risks intact.”

Crude oil for February delivery gained as much as 67 cents, or 0.7 percent, to $94.80 a barrel in electronic trading on the New York Mercantile Exchange. It traded at $94.65 a barrel at 3:54 p.m. Singapore time. The contract closed at $94.13 on Dec. 24. Prices have risen 55 percent this year.

Nymex crude futures reached $99.29 a barrel on Nov. 21, the highest since trading began in 1983. The number of contracts traded fell 76 percent to 44,998 on Dec. 24 from Dec. 21.

Brent crude for February settlement rose as much as 81 cents, or 0.9 percent, to $93.51 a barrel on London’s ICE Futures Europe exchange. It traded at $93.36 a barrel at 3:32 p.m. Singapore time today.

Iraq exported 1.9 million barrels of oil a day in September compared with 1.69 million barrels a day in August, according to data supplied by the U.S. Department of State. The Middle East oil producer holds the world’s third-largest crude oil reserves.

Turkey Attacks

Turkish Prime Minister Recep Tayyip Erdogan said yesterday attacks on bases of the Kurdistan Workers Party, or PKK, in Iraq would continue.

Erdogan told lawmakers of his Justice and Development Party today that the military was targeting only the PKK. News reports have cited Iraqi Kurdish leaders as saying that “several” civilians have been killed.

Turkey launched bombing raids against the PKK in Iraq on Dec. 16 and Dec. 22 and briefly sent troops over the border. As many as 175 PKK fighters were killed in the first of those attacks, the Turkish military said on its Web site.

The military had killed five Kurdish rebels in an operation inside Turkey, the BBC reported on its Web site yesterday, citing a statement from the Turkish military.

U.S. Stockpiles

Crude oil rose on Dec. 24 on speculation that a U.S. Energy Department report tomorrow will show inventories in the world’s largest energy user fell for a sixth week.

Crude-oil stockpiles dropped 1.63 million barrels in the week ended Dec. 21, according to the median of responses by eight analysts surveyed by Bloomberg. The department is scheduled to release its weekly report on inventories on Dec. 27 at 10:30 a.m. in Washington, a day later than usual because of the Christmas holiday yesterday.

“Prices are being supported by speculation that U.S. inventory data will continue falling,” said Masahiko Sato, a senior analyst at Ovalnext Corp. in Tokyo.

See the full report at Bloomberg

- No need to explain the impact of this event on the oil prices! Time will tell what’s going to happen later!

According to Yahoo!Singapore News:

SINGAPORE – Oil prices rose Wednesday on new supply concerns amid expectations that data from the U.S. will show a new decline in its oil inventories.
Crude oil supplies in the United States are expected to fall 1.2 million barrels, the sixth straight weekly decline, in a report from the U.S. Energy Department, according to the mean of forecasts by analysts in a Dow Jones Newswires survey.

The drop is expected because of a decline in imports that market watchers blame in part on fog that kept tankers outside the Houston Ship Channel last week.

The report by the department’s Energy Information Administration will be released on Thursday this week, a day late due to the Christmas holiday.

Read the full article at Yahoo!Singapore News

- Oh yes, Turkey continued their strike at Northern Iraq too so what is it going to be? $95 this week?

According to The News Tribune:

DALLAS – For cash-strapped consumers already beset by higher gasoline prices and escalating mortgage rates, the hits just keep on coming. This time, it’s food.

The sharp rise in food prices seen in 2007 is expected to be followed by another higher-than-normal jump next year, the USDA said Dec. 17. And 2008’s punch will be to the breadbasket.

Items made with wheat (breads and crackers) and soybean oil (cooking oil and fried foods) are expected to rise so much next year that they’ll boost the cost of cooking at home by up to 4.5 percent – half a percentage point more than predicted just a month ago.

So pinched consumers thinking they can cut back by eating at home more will find little relief there. Home cooking remains less expensive than eating out, but the gap is closing.

This year is expected to go on record as having one of the largest increases in food prices since 1990 – a jump of 4 percent, according to economists at the U.S. Department of Agriculture.

And 2008 will bring an additional rise of at least 3 percent, according to the USDA forecast. Both rates are substantially higher than the 2.4 percent gains seen each year in 2005 and 2006 and the 1.8 percent rise in 2002.

GAS PRICES GO UP TOO

Meanwhile, the Energy Information Administration forecasts a 17.7 percent jump in crude oil prices next year, with a corresponding 10.7 percent boost in the price of a gallon of regular gasoline.

So just driving to the grocery store will cost more.

For many consumers, rising food costs plus escalating energy prices add up to tough choices.

Antonia Flores, a Dallas mother of four, said she and her family have had to forgo meat because of higher food prices.

“When we used to go to the grocery store, we used to buy any kind of meat,” she said through an interpreter at North Dallas Shared Ministries, a charitable organization where the family went to seek help getting food. “Right now, we can’t buy meat. The things that we eat are beans, soup, potatoes.”

While consumers watch grocery and gas costs increase, economists chart the rise of the pain inducers.

Ephraim Leibtag, an economist with the Economic Research Service of the USDA, spent Monday morning bumping up estimates for 2008 price hikes for grocery items such as fats, cooking oils, cereals and bakery products.

The growth rate escalated beyond estimates made just a month ago after the USDA looked at November’s consumer prices. Not everything is getting more expensive. The price of eggs, for example, is expected to drop next year by at least 2 percent after running up 28 percent in 2007.

But elsewhere, 2008 will be a worse year than most. With an anticipated gain of between 5.5 percent and 6.5 percent, cereals and baked goods are expected to see the biggest jump of any single food category, according to the Economic Research Service estimate.

MORE FARMERS TURN TO CORN

The 2008 price hike for the category comes on top of the 4.3 percent rise expected this year.

Leibtag said wheat costs have gone up as supplies have gone down, due in large part to a drought in Australia, a major supplier of America’s wheat. (The Australian drought was earlier blamed for this year’s expected 7.4 percent rise in dairy prices.)

Sara Lee Corp., which has a bakery in Dallas, has raised prices three times, for a total of 15 percent, since December 2006. The most recent increase, 5 percent, was announced Monday but may not show up on grocery goods until next year, said Mark Goldman, spokesman for the company based in Downers Grove, Ill.

“We’re talking about prices (for wheat products) that are double, in some cases triple a year and a half ago,” Goldman said.

Meanwhile, the price for oils, especially soybean oil, is expected to climb 5 percent to 6 percent as soybean farmers switch to corn.

Corn farmers are reaping higher prices as more corn is diverted from animal feed to fuel.

According to philly.com:

NEW YORK – Oil futures drifted higher in light holiday trading yesterday after predictions of a drop in crude inventories raised new supply concerns.

With little other news to motivate buying or selling, investors focused on forecasts by analysts including Addison Armstrong, director of exchange-traded markets at TFS Energy Futures L.L.C., who predicted crude supplies fell 1.5 million barrels last week. Tim Evans, an analyst at Citigroup Inc., predicted that crude supplies fell 2 million to 3 million barrels.

The Energy Department’s Energy Information Administration reports oil inventories Thursday this week, a day later because of Christmas.

Light, sweet crude for February delivery rose 82 cents to settle at $94.13 a barrel on the New York Mercantile Exchange after falling as low as $92.50 earlier. Prices rose more than $2 Friday after the government reported consumer spending jumped more than expected in November, raising hopes that the economy will weather the crisis roiling credit markets and that demand for oil and gasoline will rise.

Rising stocks also sent oil prices higher yesterday; energy investors often view the stock market as a barometer of economic sentiment. But analysts cautioned against reading too much into price moves on light trading days around the holidays, noting that prices can be distorted when volume is low. The Nymex closed an hour earlier, at 1:30 p.m., and markets in the United States and many other countries will be closed today for Christmas.

At the pump, gasoline prices fell 0.2 cent overnight to a national average of $2.974 a gallon, according to AAA and the Oil Price Information Service.

According to DAWN Internet Edition:

ISLAMABAD, Dec 24: The countrywide shortage of petroleum products has worsened, particularly in the NWFP where it is reported to be affecting the daily life and anti-terror efforts.

Informed sources told Dawn that the provincial government has been complaining to the federal government about the shortage of POL (petroleum, oil, and lubricant) products for the past two weeks but there was little the centre could do in view of the limited commercial stocks and depletion of the strategic stocks to the rock bottom level.

“As already intimated, serious shortage of diesel/petrol has been reported from all over the province, which has further deteriorated the situation about POL supplies (sic). This has resulted in an increasing law and order situation in some of the districts of the province,” said a telegraphic communication dispatched by the provincial government to the president, caretaker prime minister, ministry of interior and the general headquarters.

The provincial government has warned that the situation may “further aggravate which has a sure potential of resulting into a serious law and order situation” if immediate remedial measures are not taken. “Additionally, the impending oil crisis may also cause serious disruption in the coming elections,” says the ‘most immediate’ fax message.

In a related move, the ministry of petroleum has been instructed at the highest level to prevail upon the oil marketing companies to replenish defence stocks immediately and then meet commercial needs in the market, said the sources, adding it was totally beyond expectation that stocks kept for emergency situations had been consumed despite advance payments made by the ministry of defence.

The sources said the entire diesel import orders placed for December were 230,000 tonnes. Almost one third of this would need to be diverted to build strategic stocks, resulting in a volatile situation in the market.

Those dealing with the oil products and supplies said there were also reports of smuggling of diesel in areas close to Attock and Mehmoodkot installations where more than 64 per cent growth in sales had been reported over the last few months. The sources said the product was being sold in Afghanistan at about Rs50 per litre against about Rs34 at home.

Meanwhile, the price differential claims (PDCs) payable by the federal government to the oil companies have been estimated to increase to Rs45 billion as on December 31, even after payment of Rs12 billion to Pakistan State Oil (PSO) a few days ago through a banking consortium led by Habib Bank Limited at an interest rate of almost 10 per cent. This liability along with another Rs6 billion to be paid to Shell Pakistan soon would increase to Rs22 billion (instead of Rs18 billion) to be payable in lump sum in 2010 by the next government from the public exchequer.

The PSO’s dues would again increase to about Rs24 billion by the end of the month, followed by Rs10 billion of Shell, Rs4.5 billion of Caltex and Rs7 billion of other oil companies like Admore and Askar Oil which have virtually stopped diesel sales as refineries have refused supplies because of their limited paying capacity.

The crisis situation did not aggravate in a day or two. The ministry of petroleum had been informing the government since late October.

Overall oil reserves have never been so low in Pakistan’s history and on such a prolonged basis. Even after the 1998 nuclear tests, Pakistan had oil reserves for more than 11 days when the country did not have enough foreign exchange reserves for oil purchases and had to bank on supplies from Saudi Arabia on deferred payment.

About 7.5 million tonnes of diesel was consumed in the country last year as against total oil consumption of 17.5 million tonnes. Furnace oil has the second largest share and remains in the range of 5-7 million tonnes depending on power production requirements.

- Pakistan now faces similar serious oil shortages and might sparks off social unrest if this keeps up. Prepare now! Go renewable energy!