Monitoring desk
ISLAMABAD/KARACHI: Pakistan oil companies have asked the Finance Division to immediately intervene to ensure the timely issuance of letters of credit (LCs) to import petroleum products to avoid the fuel shortage in the country.
The Oil Companies Advisory Council (OCAC) in a letter has highlighted the imminent shortage due to delays in the opening of LCs for the import of petroleum products.
According to the OCAC, Pakistan currently has diesel reserves only for 32 days. The OCAC said that the country is left with only 19 days of petrol reserves as no LCs were being opened on new imports. The letter has warned that the fuel crisis could occur in the next two or three weeks due to the unresolved LCs issue.
Oil companies raise the alarm bell
The OCAC said that Pakistan has to import approximately 430,000 metric tonnes (MTs) of mogas, around 200,000 MTs of high-speed diesel, and 650,000 MTs of crude oil every month, costing around $1.3 billion.
The OCAC said that “If LCs are not established timely, critical imports of petroleum products could be impacted, leading to a fuel shortage in Pakistan and if the supply chain is compromised, it may take six to eight weeks to normalize.”
The OCAC said that the opening and confirming LCs have caused delays in multiple cargoes with few cancellations. “The conditions have deteriorated during the current month as banks are declining LCs to the petroleum industry,” the OCAC said.
The letter said that the situation remained bleak in the first week of January 2023, when Pakistani banks denied new LCs, leading to imminent shortages of oil and fuel at the retail end in upcoming weeks.
“Some fuel import orders have also been canceled and the opening of LCs is becoming difficult with each passing day,” the OCAC said.
