ISLAMABAD, May 4: The government has estimated that oil import bill will rise to $5.5 billion next year owing to another 15 per cent increase in the international oil prices despite constant consumption. A senior finance ministry official told Dawn that next year’s crude oil import bill would amount to $2.9bn followed by $2.08bn for diesel and furnace oil.

He said the next year’s foreign exchange estimates had been finalized on the basis of these oil import costs. The petroleum sector would be the single largest segment eating up major part of foreign exchange reserves during this and next year, he said. For the current year, the government had estimated around $3.5 billion oil imports in the budget 2004-05, which has now been revised upward to $4.66 billion because of higher international oil prices.

The official said these estimates were part of the next year’s budget under which the balance of payment position would continue to deteriorate for the second consecutive year and increase trade deficit. The increase in petroleum imports will be on two fronts -– an increase in the consumption of high-speed diesel and furnace oil and a rise in the international oil prices.

The prices of diesel and fuel oil for the remaining period of the current year are based on actual average prices of July 2004 to April 2005. The prices diesel and furnace oil for the next year budget are estimated at $375 per ton and $200 per ton, respectively.

The crude prices for April-June 2005 are taken as actual average for July 2004 to March 2005 i.e. $39 per barrel. However, the crude prices for 2005-06 have been estimated at $45 per barrel on the basis of actual average of the last 10 months ($39 per barrel) plus a forward provision of $6 per barrel in view of the instability and current trend.

The official said the consumption of furnace oil was on the rise for the last two years because of low water availability for power production and this trend would continue next year as well. He said the fuel oil import, which amounted to 665,600 tons in 2003-04, was estimated to increase to 1.2m tons in the budget projections but has now been revised to 1.67m tons. Next year, furnace oil in use is expected to go up to 1.8m tons.

On the contrary, the use of high speed diesel is on the decline as compared to the past. In 2003-04, the HSD consumption stood at 4.5m tons but reduced to 4.2 million tons in 2004-05. It is expected to go up again to 4.6 million tons. Similarly, the import of crude oil continues declining in terms of quantity but rising in value terms. In 2003-04, the crude consumption stood at 57.7 million tons at a cost of $1.747 billion. It was estimated in the budget that the consumption would increase to 68.8 million tons in 2004-05 at a cost of $2.06 billion. The consumption is expected to be much lower at 62.4 million tons but its cost will increase to $2.4 billion by the end of the year.

The total petroleum consumption, which stood at 16.8m tons in 2002-03, reduced to 13.8 million tons in 2003-04. Total consumption was estimated at 15.4 million in the last year budget, but actual consumption target has been revised to 15.55 million tons. The next year’s consumption would be slightly higher at 16m tons.