Only one supplier has responded to the Pakistan State Oil (PSO) tender for the supply of 54,000 metric tons (MT) of gasoline during the last week of July, further worsening the issue of letters of credit (LCs).
An official source reported that due to the LC issues, only one supplier participated in the PSO Mogas Tender for the delivery of 54,000 MT of gasoline from 29 to 31 July 2022.
PSO floated tenders for the supply of 50,000 MT of Petrol 92 RON and 4,000 MT of Petrol 95 RON on 29 and 31 July, but only one company, Idemitsu, responded and offered $20.688/barrel for 92 RON and $23.888/barrel for 95 RON.
According to the source, two other suppliers, ADNOC and BB Energy, regret participating in the tender process.
Foreign banks are not confirming local refineries’ or oil marketing companies’ (OMC) letters of credit for the import of crude oil and petroleum products.
Pakistani banks were opening LCs on behalf of the Refineries/OMCs, but their partner banks were not extending credit cover, which is hurting the import of crude oil and petroleum products.
The source remarked that the foreign companies’ reluctance to reply to Pakistan’s refineries and OMCs tenders is due to a lack of trust.
Earlier this week, two cargos carrying petroleum products from PSO were unable to offload due to the lack of confirmation of LCs by international banks. Refineries and OMCs have repeatedly conveyed this issue to the Petroleum Division, but no progress has been made on the matter.
The supplier is requesting payment and is not willing to accept unconfirmed LCs. This lack of certainty and mistrust must end as it could push the country into a new fuel shortage crisis.
