ISLAMABAD: Pakistan will introduce a bonded bulk storage policy for crude oil and petroleum products by the end of June, Finance Minister Ishaq Dar said on Friday. Dar in his budget speech said under the policy, foreign suppliers will be allowed to procure crude and POL products from the international market and store them in bonded bulk storages in Pakistan ports.A senior official from the Petroleum Division explained to The News that if Pakistan needs to procure crude or finished oil products from foreign suppliers, the country's customs department will de-bond the stored products. This is how the oil products will be formally imported to Pakistan.
However, the policy, he said, will allow foreign suppliers to export the bonded products. If foreign suppliers use the country’s storage, they will pay for it. However, the products stored in the bonded bulk storage will not be considered imported products unless these products are de-bonded by the customs department. This policy will help reduce the LCs and freight charges to a reasonable level and maintain the oil supply chain all the time in the country as in the past, the supply chain got disturbed. This policy will also help foreign suppliers build bonded bulk storages in Pakistan ports. The relevant officials said that the Port of Fujairah was developed initially by allowing foreign oil supplies to store their oil supplies in bonded storages. Then foreign fuel suppliers started developing the bonded storage at Fujairah port and this is how the said port was developed.
This policy was earlier pitched in the ECC meeting but there were some observations made by some of the participants which is why it was decided to further deliberate it. Under the proposed policy, foreign supplier shall establish a subsidiary company (The Consignee), registered in Pakistan having bank accounts in the country under the relevant Pakistani laws/rules for undertaking operational/business activities on behalf of foreign supplier as well as local purchasers.
The Consignee shall be bound to develop their own dedicated storage infrastructure located around port premises only for storing crude oil and petroleum products, duly licensed by the OGRA, under the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016.The Consignee shall then sell the goods to Pakistan licensed purchasers (Refineries or OMCs) against opening of Letter of Credit through scheduled banks without requiring LC confirmation by international banks or advance payment, in US Dollars or Pak Rupees, as mutually agreed by foreign supplier and Pakistani purchasers, as per applicable foreign exchange regulations.
For selling the bonded goods to the local purchasers, the Consignee shall file Electronic Import Form (EIF) with his Goods Declaration (GD) for Ex-bonding (EB), to clear the bonded goods for custody transfer to local purchasers for subsequent home consumption, on payment of all applicable duties and taxes by Consignee on behalf of purchasers.