February 03, 2023 (MLN): The massive depreciation of the rupee in Pakistan has caused billions of rupees in losses to the oil industry, as per the notice issued by Oil Companies Advisory Council (OCAC).
The losses have impacted the profitability and viability of the sector and it is requested that immediate steps be taken to compensate the industry.
The ECC approved compensation for foreign exchange losses for LCs up to 60 days using Pakistan State Oil as a benchmark, but members are still unable to recover their entire losses.
The Oil and Gas Development Company (OGDC) has adopted the practice of not fully passing on the impact of the depreciation, putting a burden on the sector.
It is crucial that the impact of the exchange rates be passed in one go and not staggered.
The trade finance limits available from the banking sector have become inadequate due to the depreciation and surge in oil prices.
The LC limits have dropped by 15-20%, the notification read.
To ensure the import of adequate products in Pakistan, it is vital to increase the trade finance/LC limits of the industry in line with the current oil prices, exchange rate, and the volumes being handled by each company.
