Fuel shortage temporarily eases as Sindh clears PSO vessel

Oil marketing companies likely to get 15-day consignment releases without full bank guarantees, say sources

The threat of a shortage of petroleum products has been temporarily averted after the Sindh government cleared a Pakistan State Oil (PSO) vessel on a 15-day undertaking.

The clearance of petroleum consignments at Karachi Port had been delayed due to the provincial government’s enforcement of a 1.8% Sindh Infrastructure Development Cess, prompting fears of a nationwide fuel shortage.

The 1.8% cess is expected to increase the cost of petroleum products by more than Rs3 per litre. Although fuel prices are regulated, the levy’s imposition will have a direct impact on consumers.

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

OMCs have reportedly shown reluctance to submit 100% bank guarantees, arguing that doing so would severely affect their cash flow. Officials estimate that this additional cost could translate into a burden of at least Rs3 per litre for consumers.

The Sindh Excise Department has issued a second urgent notice to OMCs, directing them to submit the required bank guarantees instead of undertakings. The department has stated that companies’ cases will only be processed once the guarantees have been received.

 

It further warned that any disruption to fuel supplies resulting from a failure to provide the guarantees would be the responsibility of the respective companies.

Read: Nationwide fuel shortage feared as Sindh imposes infrastructure cess 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 the OCAC, petroleum cargoes currently being discharged, along with ships anchored at ports, require immediate customs clearance.

The letter stated that PSO’s oil tankers – MT Islam 2 and MT Hanifa – are berthed and awaiting clearance. It added that oil stocks at the Keamari terminal are running low and that the two vessels at Karachi Port Trust (KPT) must be granted customs clearance without delay.

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

The Oil Marketing Association of Pakistan (OMAP) also warned that the 1.85% Infrastructure Development Cess and mandatory bank guarantee requirement could disrupt petroleum imports across the country.

OMAP Chairman Tariq Wazir Ali cautioned that the Sindh government’s new policy poses a “serious threat” to the national petroleum supply chain. He warned that unless the bank guarantee condition is withdrawn, Pakistan’s oil imports could face severe disruptions, potentially leading to a shortage of petrol and diesel nationwide.

“This issue requires urgent attention,” Ali emphasised. “If timely action is not taken, the country could face a severe shortage of fuel, impacting both the economy and industry,” he added.