Pakistan may experience a shortage of petroleum products due to the ongoing US dollar liquidity crisis.
The shortage of USD may prevent refineries’ import of vital chemicals to process crude oil.
According to the local newspaper, The News, “The LC for the import of chemicals important for refinery operations is not being opened, and this condition may lead to curtailment or suspension of the refineries’ operations, resulting in a shortage of POL products, mainly of Mogas (petrol),”
A chemical supplier told the local newspaper that ” due to the payment for a $1 billion bond, the central bank has informed the local commercial banks that no Letters of Credit would be issued until December 6, 2022.”
The journal also said that oil marketing organizations (OMCs) were experiencing the same issue, which resulted in the postponement of imported finished goods and crude oil shipments. However, the issue of vital chemicals is of the utmost importance, as import delays will negatively impact refinery operations.
A representative for the Petroleum Division and other senior officials could not explain delaying the opening of LCs to import vital chemicals when approached.
Currently, 87% of finished POL products and crude oil are imported. The existing refineries utilize a variety of inputs to process oil to satisfy Pakistan’s specifications, but suppliers have been denied access to essential LCs, according to sources.
Sources in the refining industry stated that several refineries had submitted letters supporting chemical suppliers to ensure the shipment of vital chemicals.
Considering the severity of the matter, a chemical supplier submitted a letter to Dr. Asif Ali, Director of Exchange Policy at the State Bank of Pakistan, on November 25 requesting the opening of a letter of credit for the import of chemicals.
Since the unavailability of certain chemicals could disrupt the operations of refineries, the letter urged that the Letter of Credit be issued without delay.