Exchange loss worries behind petrol shortage

KARACHI: Out of around 50 oil marketing companies only four major ones hold 90 percent of the petrol stock, while the rest not importing the fuel were causing a petrol shortage, The News learnt on Friday.

Pakistan is currently facing a short supply of petrol, with its most populous province, Punjab bearing the brunt of the crisis. Major and smaller cities, towns and villages in Punjab do not have the major fuel.

The government has warned to refrain from hoarding petrol in anticipation of increase in its price in the next fortnightly review, slated for February 15, 2023.

Sources in the country’s oil sector have squarely blamed the oil marketing companies, petroleum dealers as well as the government.

Sources pointed out that the majority of OMCs were not importing petrol in view of exchange losses, which the government had adjusted only partially and that too in different phases.

They said that smaller OMCs did not have even twenty days' stock of petrol as they were not importing the fuel because of fears about exchange rate losses.

Only Pakistan State Oil (PSO), Shell Pakistan, Total Parco and Attock Petroleum were importing petrol and 90 percent of the stock lies with these four OMCs. There are around fifty OMCs operating in the country and some have limited stock whereas others have gone dry.

“Who will import petrol when there are apprehensions that exchange rate losses would not be adjusted and would take time to be paid back,” an official of an OMC asked.

Sources said that other than the low import of petrol by majority of OMCs, petroleum dealers were also having a field day and were involved in the hoarding of petrol in view of the expected increase in prices by mid-February.

The ex-refinery price of petrol is showing an increase mainly because of massive dollar appreciation against the rupee. Dealers are exploiting the situation by indulging in hoarding to make windfall profits, oil sector people stated.

Government policies have also contributed to the petrol shortage, especially related to taxation on petroleum products.

“If the government has to increase taxes on petroleum products, then it should raise it immediately rather than waiting for the fortnightly review as it gives the opportunity to hoarders to exploit the situation for making huge profits,” sources said.