By Staff Reporter
ISLAMABAD: Pakistan’s oil refiners and marketers have asked the State Bank of Pakistan to extend by two months, or until market conditions stabilize, a temporary permission to import petroleum products on a cost-insurance-and-freight (CIF) basis, under which buyers shoulder the full responsibility for import costs and final delivery once cargoes reach the destination port.
The request came in a letter sent on Monday to SBP Governor Jameel Ahmad by the Oil Companies Advisory Council, an industry group representing more than three dozen oil companies and refineries. With roughly two weeks remaining before the existing 60-day relaxation expires on May 10, the industry warned that reverting to stricter terms now would jeopardize fuel supplies at a time of heightened seasonal demand.
The CIF arrangement was introduced after the OCAC highlighted severe difficulties securing adequate marine and war-risk insurance cover for shipments amid the US-Israel war on Iran. Marine insurers have either pulled back entirely or imposed sharply higher premiums for vessels operating in the Persian Gulf and the Strait of Hormuz, disrupting traditional cost-and-freight (C&F) import practices.
In the letter, the council referred to its earlier appeal citing the “extraordinary geopolitical situation in the Middle East.” The subsequent SBP approval for CIF-based imports over 60 days proved critical, the group said, enabling refineries and oil marketing companies to secure cargoes under exceptionally difficult conditions. Yet the underlying pressures have not eased. “The situation in the region remains volatile with no meaningful de-escalation or restoration of normal shipping and insurance conditions,” the letter stated. “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 council noted that the oil industry anticipates considerable challenges in sustaining uninterrupted supply chains if the current relaxation lapses. In view of the ongoing uncertainty and to protect national energy security — particularly ahead of rising summer fuel demand — it asked the central bank to extend the temporary permission for CIF imports of crude oil, refined petroleum products, base oil and allied materials for a further two months, “or until market conditions stabilise.”
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