The Oil Marketing Association of Pakistan (OMAP) has urged the Oil and Gas Regulatory Authority (Ogra) chairman to save the oil industry from the looming financial crisis following excessive depreciation of the rupee
Highlighting the matter in a letter written to the Ogra chairman, OMAP sought the authority’s prompt action for the resolution of the issue in order to shield the industry from failure
OMAP Chairman Tariq Wazir Ali, in the letter, stated that the recent depreciation of Pakistani rupee had not only affected the national economy, but the oil industry as well
The industry, which was already struggling, would now face a loss of billions of rupees as the Letters of Credit (LCs) rates would be settled but the products had already been sold
“Although compensation is available in terms of foreign exchange losses for LCs up to 60 days using PSO as a benchmark, the industry has suffered since the increase in prices announced on January 29, 2023,” it said
“The reason behind this suffering is that PSO is settling its HSD (high-speed diesel) LCs not on announced 60-day credit but its own defined credit of 30 to 45 days
Actual payable is cleared by the government later if PSO settles its obligation in less than 60 days
This should be passed on to the general public so that the industry may reduce its losses,” the letter read
Furthermore, it said that previously Ogra used to put all the burden of rupee depreciation on the industry instead of passing it to the end-users, which also caused losses to the industry
Therefore, Ogra must pass on a lower burden of exchange rate to benefit the industry
OMAP letter sought Ogra’s support to convince banks to increase the limit on trade finance/ LCs as per the current oil prices, volumes of companies and exchange rate
Published in The Express Tribune, February 3rd, 2023
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation
Date: | 04-Feb-2023 | Reference: | View Original Link |
---|