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Petrol crisis to hit Pakistan by mid-Feb, refineries warn

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  • Delay in payments of raw materials hamper petrol production.
  • Situation to become critical if remedial measures not taken immediately.
  • Punjab already experiencing unavailability of petrol.

KARACHI: The refineries warned of a looming petrol crisis by mid-February if the government fails to resolve the payments issues of imported raw materials and additives needed by the sector, The News reported Friday. 

The delay in payments of raw materials and additives as well as the dollar shortage hampered the production of petrol massively, the refineries explained. 

“The situation will become extremely critical mid-February 2023, if remedial measures are not taken immediately,” local refineries warned State Minister for Petroleum Dr Musadik Malik and Governor State Bank of Pakistan (SBP) Dr Jameel Ahmed in separate letters. The letters were jointly written by Pakistan Refinery Limited, National Refinery, Attock Refinery and Cnergyico Refinery.

Difficulties in establishing letters of credit (LCs) for the payment of raw materials and other inputs needed by the refineries have been cited as the major cause of the looming crisis. Punjab has already started experiencing the unavailability of petrol, after alleged hoarding in anticipation of the price hike expected in the next fortnightly review.

The copy of the letter available with The News says that the SBP issued a priority list of essential imports for foreign remittances of critical industries and petroleum products were included in that priority list.

However, imports of essential raw materials and additives mainly N-Methylaniline (NMA — a non-metallic RON booster) against which LCs have already been established were being held by the banks for release of documents and payments. Moreover, the banks are reluctant to establish LCs for NMA imports against which payment for month of February/March 2023 are falling, it stated.

Refineries cautioned that the delay or suspension of foreign payments for imports of such essential raw material/additives including establishing credit letters for the same would seriously hamper the operations of refineries, especially the local production of mogas (petrol).

Refineries noted that maximum production of indigenous petroleum products especially mogas at this critical time was the need of the hour, as oil marketing companies (OMCs) were already finding it difficult to import the fuel due to the foreign exchange liquidity crunch.

They added that the refining sector has been contributing enormously towards the economic development of Pakistan in the shape of revenues/government levies/taxes and more importantly processing of crude oil and substantial savings in precious foreign exchange through import substitution.

The letter said that the sector with such major contributions to foreign exchange savings should not be denied permission to remit a payment/establish credit letters to further its business operations.

Refineries asked the central bank to advise banks to release/establish credit letters for refineries, and remittances against already issued letters without further delay to avoid any unpleasant situation.

PPDA urges probe into shortage

Keeping in view the shortages that have been surfacing in different parts of the country, Pakistan Petroleum Dealers Association (PPDA) has asked the Ministry of Petroleum and Natural Resources to immediately formulate a committee to find out the reasons behind this shortage. 

The committee should consist of different stakeholders comprising the Oil and Gas Regulatory Authority (OGRA), media teams and district administrations. These combined teams should raid different oil depots, and pumps to find out the reasons behind the current shortage, especially in Punjab.

The association leaders on Thursday held a discussion programme with the Lahore Economic Journalists Association. The office bearers of PPDA said that drafts of around Rs1 billion have been stuck with oil companies, and these 12,000 dealers were not getting supplies from the OMCs.

They said that normally a petrol pump can reserve 30,000 to 50,000 litres of petroleum products and as per OGRA’s instructions, pump owners must keep these reserves for three days. On the other hand, oil depots have much more capacity to reserve oil stocks. The committee should inspect such depots and act according to the law if their involvement in stocking petroleum products is proven, they urged.

The association said that in Lahore, the daily demand for oil products was 4 million litres, whereas currently only a supply of 1.3 million litres was being providedThe pumps have been facing this low supply issue for one month.

“The companies shelve the supply to nearly half twice a month as cartelization has increased in the past six years,” they alleged. The PPDA also termed the recent statement of State Minister for Petroleum Musadaq Malik as “non-serious”, saying such an irresponsible statement could lead to further chaos.

PPDA said that the OMCs were deliberately creating a shortage, and were holding on to hundreds of thousands of liters of oil stocks, which would be released once the government increases prices.

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Pakistan’s gold prices are declining.

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Ten grams of 24 carat gold also had a price decrease of Rs. 1,115, from Rs. 239,026 to Rs. 237,911, while ten kilos of 22 carat gold saw a rise in price from Rs. 219,107 to Rs. 218.085.

The cost of ten grams of silver and one tola of silver stayed at Rs. 2,829.21 and Rs. 3,300, respectively.

As stated by the Association, the price of gold fell $13 to $2,670 on the global market.

On Monday, November 11, 24-karat gold prices fell to 3,771 Saudi Riyals (SAR) per tola in Saudi Arabia.

The price of 24-kar gold is SAR 10,067 per ounce, while 10 grams of the metal are being sold for SAR 3,237 in the kingdom, according to forex.pk.

Note: Since the prices were updated at 10:15 am on November 11, 2024, there may be some discrepancies in this post due to the dynamic nature of the gold market globally, especially in Saudi Arabia.

As the markets anticipate the Federal Reserve to take a cautious stance under U.S. President-elect Donald Trump’s administration, gold prices fell for a second session on Monday due to a stronger dollar and heightened risk appetite.

As of 09:27 GMT, spot gold was down 0.6% to $2,666.48 an ounce. The price of US gold futures dropped 0.8% to $2,673.20.

“A stronger U.S. dollar, rising Treasury yields, and increased risk appetite in financial markets are the main reasons why gold prices have declined — a trend that has gained momentum since Donald Trump’s victory in last week’s presidential election,” said Ricardo Evangelista, senior analyst at ActivTrades.

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Prices for cooking oil and ghee have increased in Pakistan.

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Details show that although the price of ghee increased to Rs 550, the price of cooking oil increased by Rs 30 to Rs 560.

The market vendors said that the cost of Karachi-branded ghee had increased by an astounding Rs 120 over the past month, to Rs 500.

The Sensitive Price Indicator (SPI), which measures weekly inflation, increased by 0.28 percent for all consumer categories during the week ending October 17, according to a report released by the Pakistan Bureau of Statistics (PBS) on October 18.

In the aforementioned group, the SPI for the week under review was 319.79 points, compared to 318.91 points the previous week, according to the PBS statistics.

In the week under examination, the SPI for the combined consumption group increased by 15.02 percent compared to the same week last year.

51 important goods for all expenditure groups and 17 urban centers are covered by the weekly SPI with base year 2015–16 = 100.

Additionally, the SPI for the lowest consumption category, which is up to Rs 17,732, increased by 0.27 percent from 312.91 points last week to 313.74 points.

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The KSE-100 Index surpassed 94,000 points, while the PSX touched a record high.

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Monday saw record highs for the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 Index broke above the 94,000 point mark in the face of robust positive tendencies.

Beginning the week on a strong note, the stock market reached a series of record highs during the trading session.

After rising 408 points to 93,700, the KSE-100 Index continued to rise 551 points, reaching 93,845. Just a short while after that, the index jumped another 728 points, breaking all previous PSX records and reaching 94,020 points.

Since the beginning of the trading week, Pakistan’s market has demonstrated sustained rise, reflecting restored investor confidence. This surge is a reflection of that. Market optimism, improved economic data, and heightened interest from both domestic and international investors are all elements that analysts say are driving the upbeat attitude.

On Friday, the KSE-100 index soared 480 points, reaching a record high of 93,001 points, marking the first occasion in PSX history that the index had pushed above the 93,000-point milestone.

According to economists, the market is booming because investors are looking forward to Pakistan’s higher economic grade and reforms. An early 250-point increase propelled the 100 index to 92,770 points, the session high before the day’s top. The prior day’s market close was at 92,520 points.

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