Import of refined POL products: OMAP urges SBP governor to help resolve issue of LCs

LAHORE: The Oil Marketing Association of Pakistan (OMAP) on Friday asked Governor State Bank of Pakistan (SBP) Jameel Ahmad to intervene in the matter of opening Letter of Credits (LCs) for import of refined petroleum products to avoid severe fuel crises in the country.

In a letter written to the governor SBP on January 18, Chairman OMAP Tariq Wazir Ali also requested a meeting on the above issue to play its role in avoiding any such fear being hand in hand with the SBP.

Asking for immediate attention of the governor SBP, Tariq Wazir Ali said: “Kindly pay attention, immediately intervene and take the matter up with the concerned authorities so any threat of imminent fuel crisis may be curbed and avoided in an efficient manner.”

The chairman OMAP also warned that if LCs are not established within a set timeline, imports would greatly be impacted and may lead to a severe shortage of petroleum products and consequently a crisis in the country, also threatening the country’s strategic defence and logistic movement.

He further observed that member companies of the OMAP are facing great challenges in opening LCs for import of refined petroleum products into Pakistan. Due to their nature, Import Contracts & Confirmed LCs are a prerequisite of doing business in our sector but unfortunately due to low foreign exchange reserves, the SBP has advised banks to do rationing on new LC opening, he wrote.

The chairman OMAP further noted that Pakistan’s monthly cost for import of petroleum products is approximately around US$ 1.2 Billion to meet the energy needs of our country. The challenges in opening and confirmation of LCs are causing delays in import of various cargos.

Until now the situation is somehow managed with the supervision of relevant authorities, however, in the current situation, we fear that conditions are turning from bad to worse. As banks decline opening LCs, this is drastically shrinking the working capital of OMCs, he said.

Copyright Business Recorder, 2023