Oil Companies Advisory Council (OCAC), a representative body of the downstream oil industry, has warned authorities that the oil industry is on the brink of collapse as it sustained severe impact due to recent Pakistani rupee depreciation.
OCAC, in a letter sent to the Secretary Ministry of Energy- Petroleum Division, and Chairman Oil & Gas Regulatory Authority (OGRA), dated 30th January, a copy of which is available to Business Recorder, highlighted the severe impact of the recent currency depreciation and requested an urgent meeting with the industry to discuss a way forward.
“As you are aware, the sudden depreciation of the rupee has caused a loss of billions of rupees to the industry, whose Letters of Credits (LCs) are expected to be settled on the new rates whereas the related product has already been sold,” read the letter.
OCAC said that these losses not only have an impact on the profitability of the sector but also on the viability of the sector since these losses in some cases might exceed the entire year’s profit for the sector.
“It is requested that immediate steps to compensate the industry should be devised,” said OCAC.
