ISLAMABAD, Nov 17: The Oil Companies Advisory Committee (OCAC) has asked the petroleum ministry to immediately allow import of petroleum products “to avert the looming supply crisis,” it is learnt.

Over a month back, the government had banned import of oil due to fear of flight of dollars from the country through this channel. Now, before allowing import of petroleum products, the government is waiting for the formal approval of $7.6billion loan package from the IMF board.

The OCAC had on Friday last sent a letter to the petroleum ministry, asking it to arrange “urgent import cargoes” for 25,000 metric tons of petrol (premium motor gasoline) for November and December and 50,000 metric tons of high speed diesel (HSD) for December.

A copy of the OCAC’s letter available with Dawn reveals that the committee has calculated that by the end of December, petrol stocks may shrink to a critical level, sufficient only for three days. Diesel stocks by this time would have fallen to a level of seven days.

If the government instantly allows imports, and immediate orders are placed for diesel and petrol, transportation of the ordered commodities to Pakistan would take between four and six weeks. So before any shortages are felt anywhere in the country, fresh stocks should be available.

But, if the government still refrains from ordering oil imports, it may result in a crisis.

“The government needs to allow import in hours, not days or weeks,” an official of an oil marketing company told Dawn.

The OCAC has also proposed that if the government is not able “to arrange urgent import cargo” for petrol and diesel, it should then arrange crude oil for the Pak-Arab Refinery Company, the country’s biggest refinery that cleans about 100,000 barrels of crude oil per day.

Due to financial crisis, flight of capital from Pakistan and a constant and steep decline in international oil prices, the government recently decided to reduce the petroleum products stocks period from 21 days to 15 days.

The OCAC has dispatched the letter to the ministry of petroleum after holding an emergency meeting on Thursday last to review the oil stocks situation in the country.

DEBT: The circular debt of around Rs192 billion, which consumers owe to oil-marketing companies (OMCs) and the OMCs owe to refineries, and the recent downward revision of Pakistan’s ranking by the Standard and Poors have made it hard for companies to honour their letters of credit (LCs) while ordering petroleum products purchase in the international market.

The Pakistan State Oil (PSO), which imports 80 per cent of the country’s total petroleum products, is facing problems in honouring its letters of credits (LCs). The advising/negotiating banks are increasingly getting hesitant to confirm LCs to the suppliers due to unstable and tight credit conditions in international banking and decline in Pakistan’s credit ranking.

The situation may improve after IMF approves the loan package, which will give credibility to Pakistan and some confidence to investors.

But, right now almost all refineries and oil-marketing companies are facing problems in convincing banks to confirm their LCs while importing crude and finished products.

In the meanwhile, the debt issue has been haunting OMCs and refineries. At present, the OMCs owe Rs77 billion to refineries, while consumers (mostly institutions and organisations) have to pay Rs85billion to the OMCs.