The government of Pakistan has released funds of around US$128 million to make letters of credit (L/Cs) more available for the country's largest vehicle fuel retailer.

The move should help Pakistan State Oil (PSO) to assist in reducing the fuel shortages Pakistan is currently experiencing.

Funds release

The majority state-owned firm is currently locked in a complex web of inter-corporate debt in Pakistan's fuel sector as it struggles with high oil prices.

The release of funds aims to ease the pressure on PSO, which is the largest oil marketing company in the country.

It will now be able to open more L/Cs, which it needs to pay for oil imports.

Taxes due

Some of the funds will have to be used to pay taxes that PSO owes to the government.

More than half of the funds released will go towards tax payments over the next few days.

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