The Petroleum Division in Pakistan has warned the State Bank of Pakistan (SBP) that the availability of petroleum products may be affected as banks are refusing to open and confirm Letters of Credit (LCs) for imports.
The oil industry, like other sectors, is facing challenges in opening LCs due to the shortage of US dollars and restrictions imposed by the SBP. This has led to the cancellation of one oil cargo of Pakistan State Oil (PSO) and uncertainty surrounding the confirmation of LCs for another cargo scheduled for loading on January 23rd.
In a letter to the SBP Governor, the Petroleum Division has drawn attention to the difficulties being faced by oil refineries and marketing companies in establishing the LCs. For example, the Pak Arab Refinery Limited (Parco) has planned to import two crude oil cargoes of 535,000 barrels each.
But banks are not willing to open and confirm the LCs. Similarly, a crude oil cargo of 532,000 barrels for Pakistan Refinery Limited (PRL) is scheduled for loading on January 30th, but its LC has not yet been confirmed.
Additionally, two petrol cargoes of PSO that are in the pipeline are also awaiting confirmation of LCs by local banks. Industry players have also reported that 18 cargoes of petrol booked by other oil marketing companies, such as GO, Be Energy, Attock Petroleum, and Hascol Petroleum, also require the opening and confirmation of LCs.
To address this issue, a series of meetings have been held since the second week of January.
