ISLAMABAD: Pakistan State Oil (PSO) on Thursday asked the Petroleum Division for a payment of $220 million to Kuwait Petroleum Corporation (KPC) to ensure a smooth supply of high-speed diesel (HSD) and jet fuel.
Document available with Business Recorder revealed that the extended credit facility of 60 days to the government under HSD import from KPC expired on December 31, 2022. In this respect, absence of renewal of the extended credit facility, PSO will be obliged to make direct remittance to KPC on the 30th day from the B/L date.
The amount of $220 million for direct remittance to KPC will become due in addition to existing payments under extended credit facility of shipments received before December 31, 2022, in absence of the extension in the credit facility by the Government of Kuwait resulting in additional pressure on foreign exchange reserves.
Payment of an amount of $55 million is due for import of HSD on February 10, 2023, payment of $10 million and $55 million Jet A-1 and HSD import on February 20, 2023, $55 million again required each for import of HSD on March 15 and 23, 2023.
‘Exchange losses’: Non-provision of needed funds worries Petroleum Division
The company requested the Petroleum Division that efforts should be made on a war footing basis so that the extension is granted by the Government of Kuwait, especially at a time when foreign exchange reserves are under severe pressure.
The oil company also says, “Since the beginning of this week, we are facing issues in establishment of certain LCs for import of Mogas and lubricants due to limited USD availability with banks. Furthermore, with respect to lubricants, we have received written intimation from bank that as per instructions issued by State Bank, lubricants does not fall under essential commodity, therefore LC cannot be established for import of lubricants”.
Due to dwindling foreign exchange reserves and issue of USD availability with commercial banks, central bank has issued instructions to banks to restrict establishment of LCs for essential items only.
The company asked the Petroleum Division that lubricants are the essential component for entire transportation sector including Pakistan Railways, industrial sector and also consumed by armed forces, therefore, the matter should be taken with the Ministry of Finance and central bank.
Copyright Business Recorder, 2023
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