Dr Musadik Malik announced a new government policy to resolve issues in the petroleum sector and break the monopoly of a few oil marketing companies. This policy, known as the ‘bonded warehouse’ initiative, allows foreign companies involved in the legal oil business globally to construct storage facilities in major cities of Pakistan. The objective is to ensure a continuous supply of petrol and diesel in the country while bringing in foreign exchange reserves.
Ending Monopoly and Preventing Artificial Oil Shortages
By encouraging foreign companies to establish bonded warehouses, the government intends to eliminate the monopoly held by certain oil marketing companies that have previously caused artificial oil shortages in the country. These companies resorted to various tactics to create scarcity, adversely affecting oil availability and pricing. The new policy addresses this issue and discourages illegal hoarding for greater profits.
Promoting Transparency and Ease of Business
Under the policy, foreign companies interested in storing petroleum and diesel in bonded warehouses must register in Pakistan and open business accounts in local commercial banks. This approach resolves the complications associated with Letter of Credit (LC) confirmation, as transactions can now be conducted directly through banks using dollars or Pakistani rupees. Such a mechanism simplifies the process, alleviates the burden on foreign exchange reserves, and facilitates timely payments.
Benefits for Small Filling Stations & Consumers
The ‘bonded warehouse’ policy is expected to provide significant relief to small filling stations, as they will now have access to oil supplies from these warehouses, enabling them to continue their operations even during oil shortages. By eliminating the charges associated with LCs, which were previously passed on to consumers, the initiative aims to lower the overall cost of oil for end-users.
Renewable Energy Initiatives
Dr Musadik emphasized that the government is taking comprehensive measures to maintain or gradually reduce energy prices, including those of petroleum, gas, and electricity. In line with this commitment, the government has secured favorable agreements, such as the Russian oil agreement and a recent deal with Azerbaijan for inexpensive gas supply. These efforts aim to end gas shortages during the winter season and promote energy security in the country.
Advancements in Renewable Energy
The government is also focused on promoting renewable energy sources. To this end, the Prime Minister has inaugurated four solar energy projects with a combined capacity of 10,000 megawatts. This underscores the government’s dedication to diversifying the energy mix and harnessing sustainable sources to meet the country’s growing energy demands.
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