Last Updated on: 8th July 2023, 11:07 pm
Severe Petrol Shortages Will Hit Pakistan Next Week
Refiners warned Thursday that an oil crisis could hit the country in mid-February if the government doesn’t resolve issues with letters of credit (LC) to import raw materials and additives needed by the local refining sector.
The refining industry has issued a series of letters saying late payments for raw materials and additives, compounded by dollar shortages, have seriously hampered oil production, a national newspaper reports.
Local refiners warned Minister of State for Petroleum Musadik Malik and State Bank of Pakistan (SBP) Governor Jameel Ahmed in separate letters that “unless immediate action is taken, the situation will become extremely critical by mid-February 2023.”
Difficulties in getting GL to pay for raw materials and other inputs were identified as contributing factors to the crisis. Punjab has already started to experience fuel shortages after sellers started to build expectations about the expected price increase in the next two weeks.
Accordingly, petroleum products have been included in the SBP’s priority list of essential imports for foreign supplies from critical industries. But imports of raw materials and essential additives, for which LCs had already been established, were in the hands of the banks. Banks are still reluctant to issue LCs for NMA imports due for payment in February/March 2023.
Refiners have warned that any delay or suspension of foreign payments for the above imports will seriously harm refiners, particularly local gasoline production.
Refiners said maximum production of petroleum products such as gasoline is essential today as oil trading companies (OMC) have already struggled to import the fuel due to the foreign exchange liquidity crisis Pakistan is facing.
They also noted that the refining sector has made significant contributions to Pakistan’s economic development in the form of government revenue/duties/taxes as well as crude oil refining and significant foreign exchange savings through import substitution.
The letter urged the authorities not to deny the refining sector permission to make payments/establish letters of credit to continue their operations.
Also Read: Miftah Ismail No Longer Promises Petrol Price Increases