A warning has been issued by the Refineries on Thursday, saying that if the government doesn’t resolve letters of credit (LCs) problems for imported raw materials and additives that the domestic refining sector needs, a petrol disaster may strike the nation by the mid of February.
According to a national daily, the refining industry claimed in a string of letters that the dollar shortage and payment delays for raw goods and additives had seriously hindered 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 “if corrective action is not taken immediately, the circumstances will become highly critical mid-February 2023.”
The crisis is being exacerbated by difficulties in setting up LCs to pay for inputs such as raw materials. In anticipation of the price increase that is expected in the upcoming fortnightly review, vendors began stockpiling, and Punjab has already started to experience fuel scarcity.
The SBP’s priority list of necessary imports for critical industries’ foreign remittances specifically included petroleum products. However, banks were holding imports of necessary raw materials and additives for which LCs have already 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 petrol production locally.
Since oil marketing companies (OMCs) were already having difficulty trying to import fuel because of Pakistan’s forex liquidity crisis, refineries indicated that maximum production of domestic petroleum products, such as gasoline, was necessary today.
Additionally, they pointed out that the refining industry has significantly aided Pakistan’s economic growth through revenues, government levies, and taxes, as well as through crude oil processing and substantial savings in valuable foreign currency through import substitution.
In order to support its business operations, the letter pleaded with the authorities to grant the refinery sector permission to remit payment and establish LCs.
