Ahmed Mukhtar Naqshbandi
ISLAMABAD/KARACHI: The refineries have warned of a looming petrol crisis by mid-February if the federal government fails to resolve the payments problems of imported raw materials and additives needed by the sector on Friday.
The delay in payments of raw material and additives as well as the dollar shortage hampered the production of petrol massively, the refineries explained.
“The situation could become extremely critical mid-February 2023 if remedial measures aren’t taken immediately,” local refineries warned State Minister for Petroleum Dr Musadik Malik and Governor State Bank of Pakistan Jameel Ahmed in separate letters. Pakistan Refinery Limited, Attock Refinery, National Refinery, and Cnergyico Refinery wrote the letters.
Difficulties in establishing letters of credit (LCs) for the payment of raw materials and other inputs needed by the refineries have been cited as the leading cause of the looming problems. Punjab has started experiencing the unavailability of petrol after alleged hoarding in anticipation of the price hike expected in the following fortnightly review.
The copy of the letter available with that the SBP issued a priority list of essential imports for foreign remittances of critical industries and petroleum products have been included in that priority list.
Imports of essential raw material and additives, mainly N-Methylaniline (NMA — a non-metallic RON booster) against which LCs have been established, were being held by the banks for a release of documents and payments. The banks have been reluctant to establish LCs for NMA imports against which payments for February/March 2023 are falling, it stated.
Petrol Crisis to Hit Pakistan
Refineries cautioned that the delay and suspension of foreign payments for imports of such essential raw material/additives, including establishing credit letters for the same, would hamper the operations of refineries, especially the local production of petrol.
Refineries noted the maximum production of indigenous petroleum products, especially mogas (petrol), at this critical time was the need of the hour, as oil marketing companies (OMCs) are already finding it difficult to import the fuel due to the foreign exchange liquidity crunch.
They added the refining sector has been contributing enormously towards the economic development of Pakistan in the shape of taxes/revenues/government levies and, more critical, processing of crude oil and substantial savings in precious foreign exchange through import substitution.
The letter said the sector with main contributions to foreign exchange savings shouldn’t be denied permission to remit a payment/establish credit letters to further its business operation.
Refineries asked the State bank to advise banks to release/establish credit letters for refineries and remittances against already issued letters without further delay to avoid any unpleasant situation.
