ISLAMABAD: The State Bank of Pakistan (SBP) has eased its rules so that banks can raise the credit limits of some oil marketing companies (OMCs) that are having trouble paying their bills, The News reports.
The central bank sent a letter to the Oil and Gas Regulatory Authority (OGRA) to say that the local lenders have been willing to help the oil industry get the money it needs, but only if the OMCs pass a credit check.
It says: “In light of the strategic importance of having enough petroleum products to meet domestic needs, the central bank has been working with the relevant stakeholders to find a solution to this problem.” Banks, OMCs, and oil refineries all took part in meetings.
According to the letter, the SBP is keeping an eye on the import transactions and credit exposures of OMCs to make sure the banks can meet the credit needs of the sector quickly.
The central bank also asked OGRA to share any shortfalls in the planned oil imports of any OMC with it, so that together, they could work to solve the problems right away.
It has been a long time now that the local refineries have been complaining to the government about how limited their credit lines are, how much petroleum products have gone up in the international market, and how much the rupee has gone down against the dollar.
People at refineries have been asking for an increase in their credit limits so that they can get crude oil quickly they can make finished goods like mogas (motor gasoline or petrol), diesel, and furnace oil.
In a letter to the SBP Governor, Dr. Reza Baqir, the additional secretary of the petroleum division, said that commercial banks were not paying attention to the needs of the industry, which was in desperate need of an increase in its credit limit.
Commercial banks were afraid to raise the credit limits for OMCs and refineries because the FIA was looking into Hascol after the company failed to pay its debts.
But the FIA allowed all commercial banks to do business with OMCs that were dishonest when they wanted to raise their credit limits because of the huge depreciation of the rupee against the dollar and the high international fuel market.
It was also decided that the Petroleum Division and OGRA would ask the central bank for help with credit limit issues that were preventing the oil sector from opening LCs for crude imports. This meeting was held on March 31, 2022.
The Oil and Gas Development Company, Pakistan Oilfields, and the Pakistan Petroleum Company are all oil exploration and production companies. The Petroleum Division will talk to them about getting more local crude to Attock Refinery Limited.
It was also agreed that Cnergyico PK would try to get the banks to raise their credit limits so that they could open LCs for crude oil imports.
During the meeting, the government said that it would do everything it could to help the people who were involved. In addition, because of the ongoing harvesting season and problems with the international market, all refineries would be used to the fullest.
Another decision made at the meeting was that all refineries would try to make more furnace oil because of the problems with LNG and the increased demand from the power sector.
The Petroleum Division was given the job of getting the OK from the government to let refineries know what kind of HSD and PMG they could make at home. This could lead to more production at the refineries.
