Oil companies raise alarm on fuel shortage in country
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Oil companies have asked the finance ministry to urgently intervene to ensure the timely issuance of letters of credit to import petroleum products to avoid a fuel shortage in the country.
According to the 24NewsHD TV channel, the Oil Companies Advisory Council (OCAC) wrote a letter highlighting challenges being faced due to delays in the opening of letters of credit (LCs) for the import of petroleum products.
The country currently has diesel reserves equivalent to 32 days, OCAC.
The country currently has 19 days of petrol reserves and no LCs are being opened on fresh imports while a fuel crisis may occur in the next 2-3 weeks due to unresolved LC issue.
Pakistan needs to import approximately 430,000 metric tonnes (MTs) of mogas, 200,000 MTs of High-Speed Diesel (HSD), and 650,000 MTs of crude oil every month, which costs around $1.3 billion.
“If LCs are not established on a timely basis, critical imports of petroleum products would be impacted which may lead to a fuel shortage in the country. It may be noted that if the supply chain is compromised, it may take six to eight weeks to normalise,” OCAC said in the letter.
OCAC said challenges in opening and confirming LCs have caused delays in multiple cargoes and a few cancellations as well. The situation has severely deteriorated during the current month as banks are declining LCs to industry members.
The situation has been especially bleak in the first week of January 2023, whereby Pakistani banks are denying any new LC which will lead to critical shortages of oil at the retail stations in the coming weeks, if not addressed immediately, added letter.
Some fuel import orders have also been canceled and the opening of LCs is becoming difficult with each passing day.
There won't be a total blackout but there will be a reduction in many sectors which will be felt.