Oil marketing companies likely to get 15-day shipment releases without full bank guarantees, sources say
The threat of shortage of petroleum products has been temporarily averted after the Sindh government cleared a Pakistan State Oil (PSO) vessel for a 15-day engagement.
The clearance of oil shipments at Karachi port had been delayed due to the provincial government’s imposition of a 1.8% Sindh infrastructure development tax, raising fears of a nationwide fuel shortage.
The 1.8% tax is expected to increase the cost of petroleum products by more than Rs 3 per liter. Although fuel prices are regulated, the imposition of the tax will have a direct impact on consumers.
According to sources, after the clearance granted to PSO, other oil marketing companies (OMCs) are also expected to release their consignments for 15 days without submitting full bank guarantees. Authorities have issued temporary approval for the clearance of imported fuel under the 15-day bank guarantee agreement.
OMCs have reportedly been reluctant to provide 100% bank guarantees, arguing that doing so would severely impact their cash flow. Officials estimate that this additional cost could translate into a burden of at least Rs 3 per liter for consumers.
The Sindh Excise Department has issued a second urgent notice to the OMCs, directing them to submit required bank guarantees in lieu of undertakings. The department has stated that companies’ cases will only be processed once guarantees are received.
He further warned that any interruption in fuel supply resulting from the lack of guarantees would be the responsibility of the respective companies.
Read: Nationwide fuel shortage feared as Sindh imposes infrastructure halt on oil imports
Scarcity fears
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, as well as ships anchored in ports, require immediate customs clearance.
The letter stated that PSO’s tankers (MT Islam 2 and MT Hanifa) are docked and awaiting clearance. He added that oil reserves at Keamari terminal are running out and the two vessels at Karachi Port Trust (KPT) should be cleared by customs without delay.
“Only after customs clearance can the continuity of the oil supply chain throughout the country be guaranteed,” the OCAC warned.
The Petroleum Marketing Association of Pakistan (OMAP) also warned that the 1.85% infrastructure development tax and mandatory bank guarantee requirement could disrupt oil imports across the country.
OMAP president Tariq Wazir Ali warned that the Sindh government’s new policy poses a “serious threat” to the national oil supply chain. He warned that unless the bank guarantee status is withdrawn, Pakistan’s oil imports could face severe disruption, potentially leading to shortages of petrol and diesel across the country.
“This issue requires urgent attention,” Ali emphasized. “If timely measures are not taken, the country could face serious fuel shortages, which would affect both the economy and industry,” he added.
