Letter of credit (L/C) difficulties at Pakistan State Oil (PSO) and poor information flows from Pakistan's ministry of petroleum and natural resources are being blamed for unprecedented petrol shortages in the Punjab.

According to media reports, the ministry had said that there was enough fuel for most of January, but the pumps at many petrol stations in the Punjab had run dry by the second week of the month.

L/C defaults

It has now been revealed that defaults on payments due to PSO from power producers for furnace oil limited the state-owned oil importer's ability to open the L/Cs required for vehicle fuels.

Normally, PSO imports four cargoes of petrol every month. Now, only two deliveries are expected during January due to the lack of L/Cs to pay for the shipments.

No credit

In December, PSO defaulted on L/C obligations, which led to banks refusing to extend credit.

The state-owned oil importer is also facing a US$64 million claim from a supplier due to delays by PSO in opening L/Cs.

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