ISLAMABAD: Pakistan’s oil industry has formally requested the State Bank of Pakistan (SBP) to extend, by at least two months, the temporary permission allowing imports of petroleum products on a cost, insurance and freight (CIF) basis, citing persistent geopolitical risks and supply chain disruptions.
In a letter addressed to SBP Governor Jameel Ahmad, the Oil Companies Advisory Council (OCAC) — representing over three dozen oil companies and refineries — emphasised that the current relaxation, set to expire on May 10, has been crucial in maintaining fuel supply under challenging global conditions.
The CIF arrangement enables importers to manage costs and logistics after cargo reaches the destination port, offering flexibility amid rising freight rates and insurance constraints.
The OCAC noted that the facility was initially granted for 60 days in response to extraordinary geopolitical tensions in the Middle East, which severely disrupted conventional import mechanisms. The industry had earlier flagged difficulties in securing adequate marine and war-risk insurance coverage, a situation that continues to persist.
According to the council, insurers have either withdrawn or significantly increased war-risk premiums for vessels operating in key routes such as the Persian Gulf and the Strait of Hormuz, following escalating regional tensions. As a result, shipping costs remain elevated, while shipowners and suppliers continue to show reluctance in operating under uncertain conditions.
Despite the temporary relief, OCAC warned that market conditions have not stabilised. Freight charges and insurance premiums remain high, and operational challenges linked to cost and freight-based imports continue to hamper smooth procurement.
The industry cautioned that discontinuing the CIF facility at this stage could disrupt supply chains and pose risks to uninterrupted fuel availability, particularly with seasonal demand expected to rise in the coming months.
Highlighting the strategic importance of energy security, the OCAC urged the central bank to extend the CIF import permission for crude oil, refined petroleum products, base oil, and related materials until market conditions normalise.
The council stressed that continued policy support is essential to safeguard Pakistan’s fuel supply chain and prevent potential shortages during a period of heightened global uncertainty.
Story by Amin Ahmed
