Foreign energy suppliers, including Chevron and Vitol, are reluctant to store and trade fuel in Pakistan under the existing policy framework, whether through private or public bonded warehouses.
According to a news report, a working paper scheduled for discussion at a Petroleum Division meeting on August 29, 2024, highlights the hesitation of these suppliers to establish a physical presence in Pakistan, citing concerns over the country’s investment climate. Chevron and Vitol, which initially expressed interest in the policy, are now reconsidering their involvement under the current conditions.
The working paper notes that the policy was originally designed to improve product availability for new and smaller oil marketing companies (OMCs) in Pakistan. These companies have faced difficulties sourcing fuel from local refineries and importing it from abroad, often encountering various obstacles.
Smaller OMCs struggle with bulk imports due to limited demand, complicating their import arrangements and affecting pricing, which in turn creates issues within the oil supply chain.
In response to a request from the Special Investment Facilitation Council (SIFC) for feedback, the Petroleum Division and Federal Board of Revenue (FBR) prepared the working paper suggesting amendments to the policy.Â
The proposed changes include making the physical presence of foreign suppliers or their subsidiaries optional instead of mandatory.Â
Additionally, it recommends redefining the term ‘consignee’ to include operators of customs licensed bonded warehouses and expanding the policy to cover liquid chemicals and petrochemicals not restricted under Appendices A and B.
The upcoming meeting will consider the feasibility of allowing foreign suppliers to enter agreements with Pakistani operators of bonded warehouses or storage facilities for product supply and storage. It will also review the inclusion of chemicals and petrochemicals in the policy, with input from the Ministry of Industries.
