KARACHI - The earnings of heavyweight energy, power and oil companies are expected to go down by 6 to 7 per cent during FY09 owing to slump in the Arab light price. The E&P sector companies - Oil and Gas Development Company Limited (OGDCL), Pakistan Oilfields Limited (POL) Pakistan Petroleum Limited (PPL) are anticipated to post EPS of Rs14.0, Rs17.2, 35.1 and EPS of 34.7 respectively in FY09. Since there is low probability of sharp decline in local oil prices below current levels (oil prices already down 64% from their peak levels), OMCs would likely to show profits beyond 1HFY09. The current account deficit of the country is likely to come down to10.9 billion dollars (6.4 % of GDP) for FY09 as the oil import bill of the country is expected to decline by 1.2 billion dollars to around 12 billion dollars (0.7% of GDP) for FY09 amid slowdown in international oil prices. However, the recent decline in oil price outlook would be negative for oil companies but it would mitigate budget deficit and reduce future borrowings by government from the State Bank of Pakistan Oil and power subsidy is one of the major issues facing the economy as it has its effects on fiscal deficit, government borrowing, circular debt, etc. Last year government borrowed Rs689bn from the central bank (Rs365bn so far in FY09). One of the major reasons was the sharp rise in oil prices which led to higher allocation of oil and power subsides of Rs175b (1.7% of GDP) and Rs133b (1.3% of GDP) respectively, higher than their respective FY08 targets of Rs15b and Rs72b. Thus, the budget deficit was higher at 7.4% of GDP. Crude oil in the US is hovering around 22-month low of $52.7/bbl which is 64% lower than its peak level in mid of July 2008. Despite global fiscal stimulus measures to avert credit crunch, cut in oil export duties like in Russia and lowering interest rates, global oil demand is expected to remain sluggish in the near term. It is expected to grow lowest after 23 years in 2008, according to IEA.