- Issue pertaining to confirmation of LCs by local, international banks was resolved few weeks ago
ISLAMABAD: Pakistan State Oil (PSO) has received Rs62 billion from the Finance Division and the Power Division for confirmation of letters of credit (LCs) to import petroleum products.
An official of PSO informed the Senate Standing Committee on Petroleum that the issue pertaining to confirmation of LCs by local and international banks was resolved a couple of weeks ago after the government released Rs30 billion out of Rs100 billion request forwarded by the PSO management.
An official of the Petroleum Division further said that the Power Division also paid Rs32 billion to the PSO which reduced the receivable of the PSO.
The decision on a brief submitted to the Senate Standing Committee on Petroleum could not be taken due to the absence of the Minister for State for Petroleum Musadik Malik, and the Secretary Petroleum.
In a written response to the committee members on PSO, PRL, PPL, BYCO, and a few other OMCs retiring their LCs at Rs242 per dollar at present, the Petroleum Division states that the LC confirmation pricing for the oil marketing companies (OMCs) and refineries has increased manifolds, aggravating the situation further.
It was further stated that the local banks are asking for margins in excess of 100 percent of LC value as collateral, which is putting extreme pressure on the working capital of companies and threatening interruption of petroleum products supplies.
“At the outset, the recent downgrading of Pakistan’s credit rating by international rating agencies has shaken the confidence of investors, banks, and other stakeholders.”
Local banks are reluctant to open LCs due to breach in per party limits and inability to obtain confirmation from international banks for LC standby, LC for import of crude oil, petroleum products, and LNG.
The chairman Oil and Gas Regulatory Authority (OGRA) and the Petroleum Division insisted that there would be no fuel shortage in the country as the country has enough stock.
The official of the Petroleum Division said that the country has 27 days stock of petrol, 43 days of high-speed diesel (HSD), 56 days stock of the Power Division, and 21 days stock of jet fuel.
The Petroleum Division said that the PSO’s receivables had risen to Rs608 billion as of July 28, 2022.
Copyright Business Recorder, 2022