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Oct 08 - 14, 2001

Tariq Kirmani, having a rich experience spanning over 32 years in the petroleum sector, has recently taken over the charge as the Managing Director of Pakistan State Oil (PSO), the largest oil marketing company in the public sector. He had joined PSO as Deputy Managing Director (Marketing) in April 1999 and took over as Managing Director in July 2001. Currently, he is also serving as director of Pakistan Refinery Ltd (PRL), Pak Grease, Attock Petroleum Ltd (APL) and Chairman, Oil Companies Advisory Company (OCAC). He has the exposure of working abroad in senior management positions especially in the United States, the United Arab Emirates and Australia. Soon after completing his Master's in Business Administration, Kirmani embarked upon a rewarding career. His first association, which spanned over almost three decades from August 1969 to December 1998 with that oil major where he held senior management positions in Marketing, Operations and Financing in Pakistan and overseas. In 1991, Kirmani became the first Pakistani to be elected as a Company Director of that multinational oil company here he served for 30 years.

PAGE: Being the chief of country's leading oil market company what is your assessment about the fall out of the present crisis on the petroleum sector in the context of the US and Afghanistan?

Kirmani: The present crisis like situation has its multi-facet impact on the economy and among the most glaring impact is the drastic cut in the sales of aviation fuel JP-1 due to cancellation of flights by the International Airliners. An off-handed assessment indicates drop in sales of aviation oil from 10050 tons per day to 7500 tons, which shows a decline of about 25 per cent of the sales at country's airports.

PAGE: Apart from the aviation sector, what is the overall growth situation in the petroleum sector of Pakistan?

Kirmani: The oil consumption in Pakistan has been declined sharply which sounds an alarmingly stagnant position in the manufacturing sector. The drop in oil consumption during the third quarter of 2001 is unprecedented indicating a 13.5 per cent negative growth in the oil consumption, which is for the first time in this history of this country.

PAGE: Don't you think that the noticeable drop in oil consumption is due to switching over of various oil consuming sector such as power generation, cement and other industrial concerns from oil to gas fired system?

Kirmani: The switching over may be one of the factors but you see that except a few companies majority of the industrial sector still running on fuel oil therefore natural gas has not a big role in the decline of the oil consumption, in fact it is the overall recession which has led to the current situation. Oil demand started declining from July 2001 while the noticeable fall in oil consumption came in September after the terrorist attacks at the economic center of the United States i.e. the World Trade Centre. In the nutshell the drop after terrorist attack is estimated around 3,25000 tons of various petroleum products.

PAGE: The US threats for striking Afghanistan has created apprehensions for international airliners as well as ocean going vessels calling at Pakistan ports. If the situation worsens how long the oil stocks in the country can survive?

Kirmani: The storage capacity for petroleum products in Pakistan is capable to keep on supplying for 20 days. If the oil shipments continue to call on Karachi ports there is no reason for any apprehension, however, if the sea communication disrupts it may naturally bring problems. The absence of any contingency plans in the oil sector is formidable and calls for an immediate attention. PSO however has the distinction of having the largest storage capacity, which are about 79 per cent of the total available storage facilities in Pakistan.

PAGE: People generally complain that the benefit of the drop in international oil prices is not passed on to the consumers while the rise in prices is usually hit the pockets of the consumers?

Kirmani: While justifying the pricing system said that time of oil purchase and delivery makes all the difference. Today's price in the international market cannot be introduced as the oil purchased during the period when the prices were on the higher side. Hence it is a matter of loading and unloading timings. Regarding overall price components, he said that 51 per cent of the petrol price based on government levies while 25 per cent on diesel and furnace oil and black oil which goes to the government kitty.

PAGE: Development surcharge is one of the major components in the oil prices can you elaborate how and where the money coming out of development surcharge is being utilized for the development of the petroleum sector?

Kirmani: The money collected under the head of development surcharge goes in the government kitty. In fact the collection goes to the ministry of finance as a part of the government revenues.