The country is in a balance of payments crisis and the depreciation of the rupee is pushing up the prices of imports.Energy accounts for the majority of import bills.
Pakistan typically meets more than a third of its annual electricity needs with imported natural gas, whose prices have skyrocketed after Russia’s invasion of Ukraine.
“There have been no shortages in the last two weeks. If no LCs (letters of credit) are currently open,there could be shortages in the next two weeks,” a senior oil company official told media. A letter of credit issued by the importer’s bank is a common form of guarantee of payment to the exporter in the oil trade.
However, oil traders avoid countries such as Pakistan and Sri Lanka due to severe foreign exchange shortages. Pakistan hiked gasoline and diesel prices by 16% on Sunday to Rs 249.80 a liter and is in talks with the International Monetary Fund to lift the suspended bailout.
State-owned refineries Pakistan National Oil (PSO) and Pakistan LNG Ltd have failed to win a number of fuel tenders in recent months.
According to a letter from Imran Ahmed(Director General of Petroleum) at an industry conference,on the financial challenges,facing fuel importers,said “the delay in opening the LC cited the “serious liquidity problem” in the country. At the same time, the managing director of PSO said a gasoline cargo due for loading on Jan 13 has already been cancelled due to the non-opening of LCs. “He added that the country is having limited stocks and this situation can lead to dry out”.
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