Last year total imports stood at 0.8 million tons of which 60% to 70% were exported by Oil Marketing Companies including Pakistan State Oil (PSO) and Shell Pakistan, according to estimates of Topline Securities.
PSO and Attock Petroleum will be negatively affected as they export around 0.25 to 0.3 million tons and 0.15 million tons of jet fuel, respectively, to Afghanistan. The decision could have a negative earnings impact of Rs2 to Rs2.5 per share on the two companies, adds the note.
Ministry of Petroleum has also decided to reduce export of surplus product jet fuel, which is largely exported under the Afghan Transit Trade including requirement from US forces, says the Topline Securities research note.
The reason for this ban is the loss to exchequer as these exports are exempted from sales tax and petroleum levy, according to news published in TheNation.
However, oil companies are expected not to let this approval go through without a fight.
Topline Securities believe that OMCs will contest against the ban and there is high probability that the decision to ban exports to Afghanistan might be taken back.
Published in The Express Tribune, October 14th, 2011.
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