business
Wednesday Nov 30 2022
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US dollar liquidity crisis may trigger fuel shortage

Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. — Reuters
Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. — Reuters
  • The LC for the import of chemicals critical for refinery operations is not being opened, say industry sources.
  • Supplier says central bank has informed has said that no LC will be opened till December 6.
  • Oil marketing companies also facing same situation.


ISLAMABAD: Pakistan may face a shortage of petroleum products as the import of essential chemicals, required by the refineries to process crude oil, may not be processed due to the ongoing US dollar liquidity crisis.

“The LC for the import of chemicals critical for refinery operations is not being opened and this situation may lead to reduction or suspension of the refineries’ operations, resulting in a shortage of POL products, particularly of Mogas (petrol),” industry sources told The News.

“The central bank has informed us that no LC will be opened till December 6, 2022 — the date of payment of bond worth $1 billion,” said one of the suppliers of chemicals.

The publication also reported that oil marketing companies (OMCs) were facing the same situation due to which the imported finished products and crude oil consignments were being delayed. However, the issue of essential chemicals is highly critical, as delay in their import will hurt refinery operations.

When contacted, a spokesman for the Petroleum Division and other senior officials did not come up with any justification for delaying the opening of LCs for import of essential chemicals.

Currently, the country imports 87% of the finished POL products and crude oil. The existing refineries use various inputs to process crude to meet Pakistan’s specification, but the suppliers have been denied to open LCs critical to refinery operations, sources said.

Some refineries have also written letters in support of chemical suppliers to ensure import of the essential chemicals, sources in the refinery sector confirmed.

Keeping in view the sensitivity of the issue, a chemical supplier wrote a letter on November 25 to Dr Asif Ali, Director Exchange Policy, State Bank of Pakistan, seeking the opening of LC for the import of chemicals.

“Since the unavailability of these chemicals can affect the refineries’ operations, therefore, it is requested that the LC may be opened without any delay,” the letter said.