Challenges in establishing LCs to pay for raw materials and other inputs have been identified as contributing factors to the crisis. After vendors started hoarding in expectations of the price hike anticipated in the next fortnightly review, Punjab has already begun experiencing petrol shortages.

Pertinently, petroleum products were included on the SBP’s priority list of essential imports for critical industries’ foreign remittances. But imports of essential raw materials and additives, for which LCs had already been established, were being held by banks. Banks remain hesitant to establish LCs for NMA imports for which payment is due in February/March 2023.

Refineries warned that any delay or suspension of foreign payments for aforesaid imports would severely impede refinery operations, particularly the local production of petrol.

Refineries indicated that maximum production of indigenous petroleum products like petrol was essential today, as oil marketing companies (OMCs) were already having trouble importing the fuel due to the forex liquidity crunch faced by Pakistan.

They also noted that the refining sector has made significant contributions to Pa

kistan’s economic development in the form of revenues/government levies/taxes, as well as the processing of crude oil and significant savings in precious foreign exchange through import substitution.