Islamabad: The petroleum division has said that the local banks are reluctant to open lines of credit (LCs) for the oil marketing companies (OMCs) and refineries and are asking for 100 percent of the LC value as collateral, which consequently threatens the oil supply in the country.
The local banks are asking for margins in excess of 100 percent of the LC value as collateral, which is putting extreme pressure on the working capital of companies and threatening interruption of supplies, official documents available to ProPakistani reveal.
The recent downgrading of Pakistan’s credit rating by international rating agencies has shaken the confidence of investors, banks, and other stakeholders. Local banks are reluctant to open LCs due to breaches in per party limits and are unable to obtain confirmation from international banks for LC/Standby, LC for the import of crude oil, petroleum products, and liquified natural gas (LNG), the documents noted.
The LC confirmation pricing has increased manifolds, aggravating the situation even further, the documents noted. The Petroleum Division has requested the Finance Division to take necessary actions on the matter and extend its support to assure availability and uninterrupted fuel supplies in the country, per the document.
The OMCs and refineries (PSO, Cnergyico-Formerly Byco, Pakistan Refinery Limited (PRL), and Shell Pvt. Ltd.) have provided the details of their payments made against LCs during the last few months (May–July, 2022), indicating their losses and gains positions due to the upward trend in exchange rate variation during the said period.
