Pakistan State Oil (PSO) has requested the Petroleum Division to pay $220 million to Kuwait Petroleum Corporation (KPC) for the supply of High-Speed Diesel (HSD) and jet fuel.
The government’s most recent credit facility from KPC under HSD imports expired on December 31, 2022, and if the extended facility is not renewed, PSO will be required to make a direct remittance to KPC on the 30th day following the B/L date, reported Business Recorder.
In the absence of a credit facility extension from Kuwait, the amount of $220 million for direct remittance to KPC will become due in addition to existing payments of shipments received before December 31, 2022, putting additional pressure on forex reserves.
A payment of $55 million is required for the import of HSD on February 10, 2023, while payments of $10 million and $55 million for the import of Jet A-1 and HSD are due on February 20, 2023. Moreover, a payment of $55 million for the import of HSD will mature on March 15 and 23, 2023.
PSO has requested urgent facilitation to ensure arrangements with the Government of Kuwait, especially since Pakistan’s forex reserves are under severe pressure. “Since the beginning of this week, we are facing issues in [the] establishment of certain LCs for import of Mogas and lubricants due to limited USD availability with banks.
Furthermore, with respect to lubricants, we have received written intimation from bank that as per instructions issued by State Bank, lubricants do not fall under essential commodity, therefore LC cannot be established for import of lubricants,” the company said in a statement.
Due to rapidly declining foreign exchange reserves and the issue of dollar availability with banks, SBP has instructed banks to limit the opening of letters of credit (LCs) to only essential items.
Lubricants are an essential component of the entire transportation sector, and PSO has requested that the matter be taken up with the Ministry of Finance and the central bank on high priority.
