Islamabad, Jan 21,2023: The Petroleum Division has warned the State Bank of Pakistan (SBP) that the stocks of petroleum products may dry up as banks are refusing to open and confirm Letters of Credit (LCs) for imports.

Like other sectors, the oil industry in Pakistan is facing hurdles to opening LCs owing to the US dollar shortage and restrictions put in place by the SBP, The Express Tribune reported.

An oil cargo of Pakistan State Oil (PSO) has already been cancelled while LC for another cargo, scheduled for loading on January 23, has not yet been confirmed.

In a letter to the SBP Governor, the Petroleum Division drew his attention towards the difficulties being faced by oil refineries and marketing companies in establishing the LCs.

According to sources, the Pak Arab Refinery Limited (Parco) has planned to import two crude oil cargoes of 535,000 barrels each but banks are not willing to open and confirm the LCs.

One crude oil cargo of 532,000 barrels for Pakistan Refinery Limited (PRL) is scheduled for loading on January 30. However, its LC has not so far been confirmed and it is being negotiated with a state-owned bank, The Express Tribune reported.

Two petrol cargoes of PSO, which are in the pipeline, are also awaiting the confirmation of LCs by local banks.

According to industry players, 18 cargoes of petrol booked by other oil marketing companies (OMCs) like GO, Be Energy, Attock Petroleum, Hascol Petroleum and others also require the opening and confirmation of LCs.

To tackle the situation, a series of meetings have been held since the second week of January.

First such huddle was convened on January 13 that highlighted the banks’ refusal to open LCs in favour of OMCs and refineries for the import of crude oil and petroleum products, The Express Tribune reported.