Islamabad : The Petroleum Division has warned the State Bank of Pakistan (SBP) that stocks of petroleum products may dry up as banks are refusing to open and confirm Letters of Credit (LCs) for imports. As reported by The Express Tribune, the oil industry in Pakistan, like other sectors, is facing constraints in opening LCs due to shortage of US dollars and restrictions imposed by the SBP. One oil cargo from Pakistan State Oil (PSO) has already been canceled while the LC for another cargo scheduled to be loaded on January 23 is yet to be confirmed.
In a letter to the SBP Governor, the Petroleum Division drew his attention to the difficulties faced by oil refineries and marketing companies in setting up LCs. According to sources, Pak Arab Refinery Limited (Parco) plans to import two cargoes of crude oil of 535,000 barrels each, but banks are not keen to open and confirm LCs.
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Cargo waiting for letters of credit
A crude oil cargo of 532,000 barrels is scheduled for loading on January 30 for Pakistan Refinery Limited (PRL), The Express Tribune reported. However, its LC is yet to be confirmed and is being negotiated with the state-owned bank. Two petrol cargoes of PSOs, which are in line, awaiting confirmation of LC by local banks.
Many meetings have been held so far
According to industry experts, 18 cargoes of petrol booked by other oil marketing companies (OMCs) such as GO, B Energy, Atok Petroleum, Hescol Petroleum and others also require LCs to be opened and confirmed. Several meetings have been held since the second week of January to deal with the situation. The first such huddle was held on January 13 to highlight the refusal of banks to open LCs in favor of OMCs and refineries for import of crude oil and petroleum products, The Express Tribune reported.
