KARACHI: The representative body of the downstream oil industry has approached the central bank governor for the resolution of “regulatory issues” that prevent banks from extending additional trade financing to liquidity-constrained energy companies.
Speaking to Dawn on Tuesday, Oil Companies Advisory Council (OCAC) Secretary-General Dr Nazir Abbas Zaidi said financing requirements of oil marketing companies (OMCs) and refineries have registered a “significant increase” in the last couple of years because of myriad reasons.
“Working capital requirements of OMCs and refineries are increasing on the back of the rupee’s depreciation and a rise in international oil prices as well as local demand,” the OCAC official said while quoting from the letter he wrote to the State Bank of Pakistan governor.
Sales by OMCs in the first seven months of 2021-22 went up 14.5 per cent on an annual basis to 12.9 million tonnes. OMCs imported 10m tonnes of petroleum products valuing $4.8 billion in 2020-21.
There’s a surge in global oil prices in view of the lifting of pandemic-related restrictions and rising prices of international commodities. The prices of crude oil, high-speed diesel and furnace oil have gone up 87-70pc in the last year or so, he said.
“It’s imperative that banks be instructed to support uninterrupted supply of oil products which, in turn, augment the country’s defence and strategic objectives,” he said.
Meanwhile, volumetric sales by OMCs increased almost one-fifth on a month-on-month basis in January.
According to Arif Habib Ltd, total sales of petrol, diesel and furnace oil remained 1.8m tonnes last month, up 19.6pc from the preceding month. The year-on-year increase in total OMC sales clocked in at 18.9pc.
“Consumption of diesel goes up around this time every year because of wheat harvesting. Also, many re-gasified liquefied natural gas plants operated on diesel last month because of the former’s skyrocketing prices in the international market,” Arif Habib Ltd Head of Research Tahir Abbas told Dawn.
In addition, bulk consumers of diesel accumulated large inventories in January in anticipation of an impending hike in its price. “They bought stocks well in advance and that pushed up the sales volume in January,” he added.
Diesel sales totalled 0.74m tonnes in January, up 20pc from the preceding month and 36.1pc from a year ago.
Consumption of furnace oil increased almost 103pc to 0.26m tonnes in January on a month-on-month basis — a surge that Mr Abbas attributed to a steep rise in electricity generation by furnace oil–run plants. Petrol sales totalled 0.74m tonnes in January, up 6.2pc from December.
