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Petrol Hike in Pakistan by mid Feb
Petrol Hike in Pakistan by mid Feb

Economy

Petrol Price Hike in Pakistan by Mid Feb

Refineries have warned Pakistan of possible crises about to happen by Mid- February. If the Pakistani government is unable to fix the payment concerns of raw material imports and other needed materials.

ISLAMABAD: Refineries have warned Pakistan of a possible petrol crisis about to happen by Mid- February if the government is unable to fix the payment concerns of imports and other needed materials.

The manufacturing of gasoline has been severely impeded by two factors; late payments of raw materials, other materials needed, and the scarcity of dollars.

“The situation will become extremely critical by mid-February 2023 if remedial measures are not taken immediately”. Refineries warned State Minister for Petroleum Dr. Musadik Malik and Governor State Bank of Pakistan (SBP) Dr. Jameel Ahmed in separate letters. These refineries include Pakistan Refinery Limited, National Refinery, Attock Refinery, and Cnergyico Refinery.

Difficulties in obtaining LCs:

The main factor contributing to the impending crisis has been identified as difficulties in obtaining letters of credit (LCs). Those letters are needed for the payments of raw materials and other inputs required by the refineries.

Punjab has started experiencing a shortage of petrol. They faced the shortage after claiming the expectations of the price increase anticipated in the following fortnightly review.

The SBP published a list of priorities of necessary imports for foreign transfers of important businesses. Moreover, petroleum items were also on that list.

The banks were holding back imports of necessary raw materials and additives. These materials primarily include N-Methylaniline (NMA), a non-metallic RON booster, against which LCs had previously been formed. Additionally, payments for the months of February and March 2023 are due against the NMA imports. But banks are unwilling to create LCs for NMA imports.

Refineries highlighted that at this crucial moment, it was imperative to produce many domestically produced petroleum products, particularly mogas. Because oil marketing companies (OMCs) were already finding it challenging to import gasoline. They faced challenges due to the lack of foreign exchange liquidity.

Read more: Dar says MEFP Draft received from IMF

They further said that the refining industry has made a significant contribution to Pakistan’s economic growth in the form of government levies/taxes and revenue. But more importantly, they contributed through the computation of crude oil and significant savings on valuable foreign currency.

Refineries asked the central bank to advise banks to start releasing LCs for refineries, and repayments against already issued letters, immediately.

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