References told S&P Global Commodity Insights that the Oil Companies Advisory Council, constituents of refineries and oil commerce corporations had written to the country’s finance ministry about oil importers facing challenges in commencement letters of acclaim for the import of petroleum products. It could take up to six to eight weeks for import procedures to normalize, sources added.
“If L/Cs are not established on a timely basis, critical imports of petroleum products will be impacted, which may lead to a fuel shortage in the country, further deteriorating the demand,” said Sumit Ritolia, a refinery economics analyst at S&P Global.
“The prolonged unavailability of import contracts and L/Cs will be sending negative signals to international oil suppliers, leading to high prices for imports and even it may lead to the forced cancellation of oil cargoes,” he said.
Energy-deficit Pakistan imports approximately 430,000 mt of motor gasoline, 200,000 mt diesel and 650,000 mt crude oil at a cost of $1.3 billion/month, according to the letter from the oil industry to the finance minister.
The banking hurdles already caused delays in the arrival schedule of multiple cargoes as well as led to the cancellation of a few cargoes, the letter said, adding that the situation has severely deteriorated during January.
“If L/Cs are not established on a timely basis critical imports of petroleum products would be impacted,” it said.