ISLAMABAD: The Federal Investigation Agency (FIA) has allowed all commercial banks to do business with scrupulous oil marketing companies (OMCs) seeking an increase in their credit limits mainly because of the massive depreciation of Pak Rupee against the US dollar and increase in the prices of POL products in the international market.
The investigation agency wrote to presidents of all commercial banks on March 18, 2022, titled ‘Review of Banking Operations with OMCs’ pinpointing that the agency was informed that banks were showing hesitation in doing business with OMCs, apparently due to the investigations against Hascol Petroleum Limited (HPL), which is one of the private OMCs.
The FIA said its ongoing investigation against Hascol should not be a source of concern for those OMCs that are not guilty of misconduct or breach of trust.
Earlier commercial banks, despite the federal government's intervention, were reluctant to increase the credit limits of oil marketing companies (OMCs) because of a probe into Hascol’s Rs54 billion default. On February 28, 2022, an additional Secretary of the Petroleum Division wrote to the Governor State Bank of Pakistan and mentioned the commercial banks' indifference to the demand of OMCs and refineries for increasing their credit limits. “Commercial banks are also reluctant in opening the letter of credits (LCs) for importing POL products," said the letter. The federal government had pleaded that if the financial limits are not increased, then there are chances of disorder in the fuel supply chain. OMCs have been saying that unless and until the credit lines are enhanced and on-time payments of price differential claims are ensured, the impending POL products crisis cannot be averted.
The working capital requirements of OMCs and refineries are on the rise on the back of PKR depreciation, increase in international oil prices and increase in local demand.
The FIA letter, whose copy is available with The News, says that FIA Sindh Zone-1 is conducting a criminal investigation against officers of National Bank of Pakistan (NBP) involved in facilitating M/S Hascol Petroleum Limited with mala fide intention, resulting in loss of billions of rupees to the bank through malpractices. The investigation reveals criminal negligence on the part of the bank to follow prudent banking practices, it said.
The agency stated that it fully supports all efforts of the banking industry to enter into any restructuring of its exposure to Hascol as it deems fit as per law.
The FIA also unequivocally stated that this investigation has been and shall continue to be conducted with the highest professional standards, but it should not be a source of concern to those not guilty of misconduct or breach of trust. “Following the go-ahead of FIA, commercial banks are now left with no choice but to increase their working capital facilitation limits to ensure the smooth imports of POL products in the country,” one of the top officials of a private oil marketing company told The News.
