ISLAMABAD: The Oil Companies Advisory Council (OCAC) blamed the Oil and Gas Regulatory Authority (OGRA) that forced reduction and manipulation in the high-speed diesel (HSD) in recent price reviews generated an inventory loss of Rs11 billion to the industry and warned uninterrupted fuel supply could not be possible under the present situation.
In a letter to the OGRA chairman, the OCAC chairman alleged that the price of HSD for the second fortnight of July 2023 has been reduced by Rs7 per litre by the government, despite the fact that the price was increasing based on a formula approved by the Economic Coordination Committee (ECC) on July 28, 2020.
“Instead of passing on the increase or absorbing the impact of this increase by reducing petroleum levy (PL), the price was unilaterally and unjustly reduced by applying inaccurate premium,” the letter says.
Petrol price slashed by Rs9, HSD’s by Rs7
The oil industry alleged as per government approved mechanism, in case of no import by Pakistan State Oil (PSO) during a particular fortnight, premium and other incidentals for the previous fortnight have to be applied; government implemented this policy to ensure that the industry gets accurate recovery for inventory which has been acquired on the rates prevailing in the previous fortnight.
Since PSO did not import any HSD during the first fortnight of July 2023, the previous premium, ie, $11.50 per BBL should have been used in price computation for the second fortnight, however, the OGRA used premium of $4.20 per BBL; this arbitrary revision of premium is against the essence of the ECC decision.
Apart from the premium, the letter maintains, other incidentals included in the price were from the previous period, ie, second fortnight June 2023 which shows that the premium applied is anomalous.
According to the OCAC calculations, the shortfall is $7.30 per BBL, the exchange rate used for prices of Rs278 against the US dollar, shortfall in premium in Pak rupee is Rs2,033.05 per BBL and the impact on price is Rs12.79 per litre.
Copyright Business Recorder, 2023
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