Forex constraints: Pakistan's oil industry warns of major fuel supply disruption
Last updated on: 08 March,2023 10:24 am
OCAC has sought an urgent engagement to address the severe impact of the rupee's recent depreciation
LAHORE (Web Desk) - The country’s oil industry has warned of major fuel supply disruption amid foreign exchange constraints and prevailing pricing mechanism.
The Oil Companies Advisory Council (OCAC), an association of more than three dozen major oil marketing companies (OMCs) and refineries, has recently written to the government about reported serious trouble in arranging crude oil and petroleum products.
Other factors hurting the oil industry are the recent currency depreciation and increase in the State Bank of Pakistan (SBP)’s policy rate.
The association, in a communication to the ministers for finance and energy, the governor of the State Bank of Pakistan (SBP) and the chairman of the Oil and Gas Regulatory Authority (Ogra), has sought an urgent engagement to address the severe impact of the recent depreciation of the rupee.
The OCAC recalled that the oil industry had been requesting the ministries of energy and finance for developing a transparent mechanism for the complete recovery of foreign exchange losses in product pricing.
It said the government should immediately revise the prices based on the current exchange rate but if it was not possible in the given challenging situation then at least a system should be put in place immediately.
The association has urged development and immediate implementation of a holistic mechanism for recovery of industry’s exchange losses through inland freight equalisation margin (IFEM) to manage the situation and ensure industry’s survival.