Fuel shortage temporarily eases as Sindh clears PSO vessel

Oil marketing companies could obtain delivery clearances within 15 days without full bank guarantee, sources say

The threat of shortage of petroleum products was temporarily averted after the Sindh government allowed a Pakistan State Oil (PSO) vessel to carry out a 15-day engagement.

Clearance of oil shipments at Karachi port had been delayed due to the provincial government’s implementation of a 1.8% tax on Sindh’s infrastructure development, raising fears of a nationwide fuel shortage.

The 1.8% tax is expected to increase the cost of petroleum products by more than Rs3 per litre. Even if fuel prices are regulated, the imposition of this tax will have a direct impact on consumers.

According to sources, following the permission granted to PSO, other oil marketing companies (OMCs) are also expected to have their shipments released for 15 days without submitting full bank guarantees. Authorities have issued temporary permission for customs clearance of imported fuel under the 15-day bank guarantee agreement.

OMCs have reportedly been reluctant to submit 100% bank guarantees, arguing that this would seriously affect their cash flow. Officials estimate that this additional cost could result in a burden of at least Rs 3 per liter on consumers.

The Sindh Excise Department has issued a second urgent notice to OMCs, directing them to submit required bank guarantees in lieu of undertakings. The ministry clarified that company files will only be processed once guarantees have been received.

He further warned that any disruption in fuel supply resulting from failure to provide guarantees would be the responsibility of the companies concerned.

Read: Nationwide fuel shortage feared as Sindh imposes infrastructure tax on oil imports

Fears of shortage

The Oil Companies Advisory Council (OCAC) had earlier written to Sindh Chief Minister Murad Ali Shah to raise the alarm over the situation. According to OCAC, oil cargoes being unloaded, as well as ships anchored in ports, require immediate customs clearance.

The letter said PSO’s tankers – MT Islam 2 and MT Hanifa – were docked and awaiting clearance. He added that oil stocks at the Keamari terminal are running out and the two Karachi Port Trust (KPT) vessels must be cleared without delay.

“Only after customs clearance can the continuity of the oil supply chain across the country be ensured,” OCAC warned.

The Oil Marketing Association of Pakistan (OMAP) has also warned that the 1.85 per cent tax for infrastructure development and the requirement for mandatory bank guarantee could disrupt oil imports across the country.

OMAP President Tariq Wazir Ali has 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 condition is lifted, Pakistan’s oil imports could face serious disruptions, potentially leading to shortage of petrol and diesel across the country.

“This issue requires urgent attention,” Ali stressed. “If action is not taken in time, the country could face a serious fuel shortage, which would impact both the economy and industry,” he added.

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