Petroleum shortage suspected as SBP allegedly closes LCs

In the latest example of the State Bank of Pakistan (SBP) operating through verbal communication instead of through official lines, the bank has informed Oil Marketing Companies (OMCs) and oil refineries that they will not be opening any new Lines of Credit (LCs) for the import of fuel until the 6th of December.

According to industry sources, the closing of LCs may result in a shortage of petroleum products in the country. Details coming in from the matter have indicated that the central bank may be choosing to close LCs because it is planning on retiring Eurobonds, and are trying to preserve dollars. In a verbal communication, OMCs and refineries have been told to balance their imports and exports.

Sources further added that the oil industry has been verbally instructed by all banks including HBL, Meezan, Habib Metro etc to wait till December 6, 2022 for LC opening. When contacted, a senior representative of the Oil Companies Advisory Council said they had not received any complaint from their members yet. “Nobody has written to us about problems in LC openings by banks, but some have indicated delays in LC opening. Whether it is procedural or by default I do not know.”

The news of the SBP closing LCs first started making the rounds when former FBR chairman Shabbar Zaidi in a television show claimed that the country could face a petrol shortage because of the SBP’s decision. While the state bank’s spokesperson has not commented on the issue, sources close to the bank have given a measured response, saying that there is no proof of the SBP giving any such indication. However, sources have claimed that the major issue is over the fact that the SBP makes its communications verbally instead of in writing.

A source in the refining sector said that the oil industry as a whole is facing such problems as banks have asked them to balance their imports and exports.

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Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected]

4 COMMENTS

  1. It is a fact that SBP is passing instructions verbally. During last week, in a meeting with SBP, we raised the LC embargo issue. We were told that open LC if the payment of LC is due after March 31 and not early than that.

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