ISLAMABAD: State Minister for Petroleum Musadik Malik Wednesday said the federal government had introduced the bonded bulk storage policy in a bid to curb hoarding and ensure a smooth supply of petroleum products in the country.
Addressing a press conference in Lahore on Wednesday, the state minister said the hoarder's stockpile fuel at illegal storage points whenever they anticipate an increase in fuel prices. “Today, I am presenting a solution to end the practice of hoarding,” he said.
Musadik said the bonded storage policy will ensure a smooth supply of petroleum products and end the practice of hoarding. “Now the world’s biggest traders will not be able to hoard oil in the country,” he remarked, local media reports.
Under the policy, foreign companies doing the legal business of oil from around the world could construct bonded warehouses for oil storage in various major cities and it would not only bring in foreign exchange reserves to Pakistan but also ensure all-the-time availability of petrol and diesel in the country, said the minister.
“It will also break the monopoly of a few oil marketing companies, which used to create an artificial shortage of oil in the country on various pretexts, and also discourage illegal hoarding of oil to gain more profits,” he added.
Musadik said the government was taking appropriate and comprehensive measures to maintain or gradually lower the prices of energy, including petroleum, gas and electricity. He further said the foreign companies, which store petroleum and diesel in the bonded warehouse, will definitely get themselves registered in Pakistan and will have to open their business accounts in the local commercial banks.
Consequently, it will resolve the issue of LCs (Letters of Credit) confirmation, as these companies will make business transactions in dollars or in Pak rupee directly through banks. In a way, it will also release pressure on the country’s foreign reserves exchange and create a little bit space for the government to make various payments.
This initiative, said the minister, will also do away with the LCs charges, which so far were being passed on to the end consumer.
Musadik asserted that the policy will be a great relief and facilitation for the small filling stations, which faced problems during shortage of oil. Now they will be able to continue their business after buying oil from the bonded warehouses. “On behalf of the prime minister, I am giving this good news to the people. It is Eid festivity so we should set aside the political talk for a while. It is the responsibility of the government to give hope to the people.”
The state minister said all the criticism by the PTI regarding the Russian oil agreement and its shipment had now died down as the second oil shipment from Russia had also reached Pakistan. He mentioned that the coalition government recently made a deal with Azerbaijan on its own terms and conditions for inexpensive gas.
Under this deal, Azerbaijan will offer a gas tanker every month and it would be up to Pakistan whether to purchase it or not. “We will purchase this gas if the price favours us. This deal will also help end the gas shortage in the country during the winter season. We have arranged inexpensive oil and gas and also put in place an effective and viable solution to cope with dry outs problem in the petroleum sector,” he remarked.
In addition, he said as per the commitment of the government to the promotion of renewable energy, the prime minister had also launched four solar energy projects with an accumulative capacity of 10,000 megawatts.
“The prime minister also issued directives for working out a comprehensive plan to divert all the major petroleum companies of Pakistan towards renewable energy, green hydrogen and green ammonia,” he added.
Taking to Twitter, Finance Minister Ishaq Dar said the federal government had fulfilled another commitment to the people that it had made in the budget speech for the Fiscal Year 2023-24 on June 9 in the National Assembly.
A senior official from the Petroleum Division explained to The News that if Pakistan needed 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.
The products stored in the bonded bulk storage will not be considered imported products unless they are de-bonding 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.
The policy will also help foreign suppliers build bonded bulk storage at the ports. Relevant officials said the Port of Fujairah was developed initially by allowing foreign oil suppliers to store their oil supplies at the bonded storages. The foreign fuel suppliers then started developing bonded storage at the Fujairah port and this is how the said port was developed.