Oil industry seeks two-month extension for CIF-based petroleum imports

ISLAMABAD: The oil industry has asked the State Bank of Pakistan (SBP) to extend, by two months or until market conditions improve, the temporary permission allowing petroleum products to be imported on a cost, insurance and freight (CIF) basis to help maintain uninterrupted supplies.

The request was made by the Oil Companies Advisory Council (OCAC), which represents more than three dozen oil companies and refineries, in a letter sent to SBP Governor Jameel Ahmad on Monday. The appeal came with about two weeks remaining before the current 60-day relaxation expires.

The temporary arrangement had been allowed in view of difficulties surrounding petroleum imports under prevailing geopolitical conditions. The move followed the OCAC’s earlier request, in which it had pointed to problems in securing adequate marine and war-risk insurance cover.

The industry body said marine insurers had either pulled back from offering war-risk coverage or raised premiums sharply for vessels operating in the Persian Gulf and the Strait of Hormuz because of the US-Israel war on Iran.

In its latest letter, the OCAC referred to its earlier appeal made in light of what it described as the extraordinary geopolitical situation in the Middle East. The SBP’s subsequent decision to allow CIF-based imports for 60 days had helped refineries and oil marketing companies secure cargoes despite difficult market conditions.

The situation in the region remains volatile with no meaningful de-escalation or restoration of normal shipping and insurance conditions. The constraints highlighted earlier — particularly the limited availability and exorbitant cost of marine and war-risk insurance, coupled with continued reluctance of shipowners and suppliers — still persist. Freight rates and war-risk premiums continue to remain elevated, and the operational challenges in executing imports under cost and freight arrangements have not eased.

The letter said the SBP circular permitting CIF-based imports of petroleum products is due to expire on May 10. The oil industry expects major difficulties in maintaining uninterrupted supply chains if the current relaxation is not continued at this stage.

The OCAC urged the central bank to continue the temporary permission for imports of crude oil, refined petroleum products, base oil and allied materials.

In view of the ongoing certainty and to ensure continuity of fuel supplies critical for national energy security — especially in light of upcoming seasonal demand — it is earnestly requested that the temporary permission for CIF imports of petroleum products (crude oil, refined petroleum products, base oil and allied materials) may kindly be extended for a further period of two months, or until market conditions stabilise.

The industry body said the extension was necessary to support continuity in fuel supplies at a time when regional volatility, high freight charges and elevated war-risk premiums continue to affect import operations.