Refineries warned on Thursday that if the government does not fix letters of credit (LCs) difficulties for imported raw materials and additives needed by the domestic refining sector, a petrol crisis might strike the nation by mid-February.
According to a national daily, the refining industry claimed in a series of letters that the delay in payments for raw materials and additives, which was made worse by the dollar scarcity, had seriously impeded gasoline production.
Local refineries sent separate letters to Governor State Bank of Pakistan (SBP) Jameel Ahmed and Minister of State for Petroleum Musadik Malik warning them that “the situation will become exceedingly severe mid-February 2023 if remedial actions are not done quickly.”
The problem is being exacerbated by difficulties in establishing LCs to pay for raw materials and other inputs. Punjab has already started to experience petrol shortages as a result of vendors stockpiling in anticipation of the price increase predicted in the upcoming fortnightly review.
The SBP’s priority list of necessary imports for important industries’ foreign remittances specifically includes petroleum items. However, banks were holding imports of necessary raw materials and additives for which LCs had previously been established. Banks are still reluctant to create LCs for NMA imports that have a payment due date of February or March 2023.
Refineries issued a warning that any postponement or suspension of foreign payments for the aforementioned imports would seriously hinder refinery operations, particularly the generation of gasoline locally.
Oil marketing companies (OMCs) were already having problems importing the fuel because of the foreign liquidity crisis Pakistan was experiencing, according to refineries, thus maximum output of domestic petroleum products like gasoline was necessary today.
In addition, they stated that the processing of crude oil and considerable savings in valuable foreign currency through import substitution were all results of the refining sector’s important contributions to Pakistan’s economic growth in the form of revenues, government levies, and taxes.In the letter, it was requested that the authorities not refuse the refinery sector’s request to send a payment or establish LCs in order to advance its commercial activities.
