Shell Petroleum has been a part of Pakistan’s landscape since the birth of the country more than 75 years ago. The recent decision of the multinational corporation to leave the country, effectively shutting down a business that had been ubiquitous in the country’s economic life, is bound to have implications beyond the immediate.

While the reasons may not only have to do with the recent economic challenges the country has faced, clearly these have proved to be the last straw. Restrictions on profit repatriation, and on purchase of foreign exchange have been stifling, and when coupled with the realisation that the government of Prime Minister Shahbez Sharif is doing precious little to bring in direly-needed structural reforms, it is not surprising that Shell has decided to down shutters. Shell’s departure will have several ramifications, in both the short- and long-term. While the impact on direct employment will not be crippling ~ the company only employs about 400 people ~ the indirect impacts will be severe and will hit contractors and associated businesses.

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Pakistan’s coffers will be poorer by nearly $2 million in taxes with the exit, although it is possible that local entities that acquire the parent company’s 77 per cent shareholding in its Pakistani subsidiary will keep the business running. Shell Pakistan had reported losses in 2022 because of exchange rate fluctuations, the devaluation of the Pakistani rupee and because of large receivables. While the immediate impacts of the decision are easy to assess, longer-term impacts could include a dent in the country’s environmental efforts. Although Shell’s primary products are fossil fuels, the company is known for its expertise in renewable energy and clean technologies.

The loss of technologytransfer opportunities is bound to hurt. But beyond these direct impacts, Shell’s decision is bound to impact investor confidence and discourage other multinational countries from investing in the country. These are factors that should worry Pakistan’s government. But beset as it is with political problems, it has been able to do little to address the issues that have brought the country’s economy to the brink, depleted its foreign exchange reserves and seen the currency in free fall. Pakistan’s citizens have reacted with shock, with one saying on social media that only Allah can save the country. Not surprisingly, angry messages have berated the political establishment and the Army for the state of the country, with one netizen saying that every other shop in Lahore has downed shutters in the wake of the country’s economic uncertainties.

It is clear that the country’s economic distress will be a major factor in upcoming elections, should they be held. The problem though is that the voter may find himself hamstrung by the absence of viable options, with nearly every player in the political drama perceived as a part of the problem, rather than a solution.