Dollar liquidity crisis may provoke fuel shortage

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Islamabad: Pakistan may face a petroleum product shortage as the current US dollar liquidity crisis prevents the import of essential chemicals required by refineries to process crude oil.

“LCs are not being opened for import of chemicals critical to refinery operations and this situation may lead to reduction or suspension of operations of refineries, resulting in POL,” The News quoted sources as saying.

“There may be a shortage of products, especially of petrol.”

The central bank has informed us that no LC will be opened until December 6, 2022. According to one of the chemical suppliers, the bond payment was made.

According to the publication, oil marketing companies (OMCs) are also facing the same situation, which is causing the shipment of imported finished products and crude oil to be delayed. The issue of essential chemicals, on the other hand, is critical, as delays in their importation will harm refinery operations.

Currently, 87 per cent of POL’s finished products and crude oil are imported. According to sources, existing refineries process crude using various inputs to meet Pakistan’s specifications, but suppliers have been denied opening critical LCs for refinery operations.

Given the sensitivity of the situation, a chemical supplier wrote a letter on November 25 to Dr Asif Ali, Director of Exchange Policy, State Bank of Pakistan, demanding the opening of an LC for the import of chemicals.

Sources in the refinery sector confirmed that some refineries have also written letters of support to chemical suppliers to ensure the import of essential chemicals.

“As non-availability of these chemicals may affect the functioning of the refineries, it is requested that the LC be opened without further delay,” the letter said.