Oil marketing companies are likely to get 15-day shipment release without full bank guarantee, sources said
The threat of shortage of petroleum products has been temporarily averted after the Sindh government cleared a Pakistan State Oil (PSO) vessel on a 15-day commitment.
The clearance of oil shipments at Karachi Port had been delayed due to the provincial government’s enforcement of a 1.8% Sindh Infrastructure Development Cess, raising fears of a nationwide fuel shortage.
The 1.8% cess is expected to increase the price of petroleum products by more than Rs3 per litre. Although fuel prices are regulated, the imposition of the tax will have a direct impact on consumers.
According to sources, after the approval to PSO, other oil marketing companies (OMCs) are also expected to get their shipments released for 15 days without furnishing full bank guarantee. The authorities have issued a temporary approval for clearing imported fuel under 15-day bank guarantee scheme.
OMCs have reportedly shown reluctance to lodge 100% bank guarantees, arguing that it would severely affect their cash flow. Officials estimate that this extra cost could translate into a burden of at least Rs 3 per liter on consumers.
The Sindh Excise Department has issued another urgent notice to the OMCs directing them to furnish the required bank guarantees in lieu of undertaking. The department has stated that companies’ cases will only be dealt with once the guarantees have been received.
It further warned that any interruption of fuel supply due to non-delivery of the guarantees would be the responsibility of the respective companies.
Read: Nationwide fuel shortages feared as Sindh imposes infrastructure cess on oil imports
Fear of lack
The Oil Companies Advisory Council (OCAC) had earlier written to Sindh Chief Minister Murad Ali Shah to raise alarm over the situation. According to OCAC, oil cargoes currently being unloaded along with ships anchored in ports require immediate customs clearance.
The letter stated that PSO’s oil tankers – MT Islam 2 and MT Hanifa – are at berth awaiting clearance. It added that oil stocks at the Keamari terminal are running low and that the two vessels at the Karachi Port Trust (KPT) must be granted customs clearance without delay.
“Only after customs clearance can the continuity of the oil supply chain across the country be ensured,” OCAC warned.
The Oil Marketing Association of Pakistan (OMAP) also warned that the 1.85% infrastructure development certificate and mandatory bank guarantee requirements could disrupt oil imports across the country.
OMAP Chairman Tariq Wazir Ali warned that the Sindh government’s new policy poses a “serious threat” to the national petroleum supply chain. He warned that unless the bank guarantee is withdrawn, Pakistan’s oil imports could face severe disruption, potentially leading to shortages of petrol and diesel across the country.
“This issue needs urgent attention,” Ali stressed. “If timely action is not taken, the country may face a severe shortage of fuel, affecting both the economy and industry,” he added.
