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ISLAMABAD: The Oil Companies Advisory Council (OCAC) stands by its stance that the Oil and Gas Regulatory Authority (OGRA) manipulated the high-speed diesel (HSD) price by reducing Rs7 per litre for second fortnight of July against the decision of the Economic Coordination Committee (ECC).

In a letter to the OGRA chairman, the OCAC challenging the computing of the HSD ex-depot price for the second fortnight says, “Our understanding is based on the fact that over time some adjustments have been made which were not in line with pricing formula and were detrimental to oil industry”.

It alleged that the Ogra made unjust adjustments to avoid a price increase. The OCAC alleged that IFRM was reduced by Rs3.21 and Rs2.72 per litre on petrol and HSD respectively. Exchange loss adjustment was reduced by Rs3.01 and Rs2.11 per litre on petrol and HSD respectively.

“Revision of oil marketing companies (OMCs) margin on motor fuels was approved by ECC on October 31, 2022, for both petrol and HSD; this revision was not incorporated in prices”.

The letter says the treatment of the exchange rate in pricing was changed in price computation for August 1, 2022; the average US exchange rate was used instead of the rate applicable on the last working day.

It further says the above is not a comprehensive list of the tactics applied by the Ogra to manage prices at the industry’s cost.

The OCAC forum asked the Ogra for an urgent meeting with representatives from the industry to thoroughly assess the matter based on factual evidence, mitigate the potential impact on future pricing and reach a mutually-agreeable resolution.

The impact of this change without the actual import of HSD at a reduced premium will cripple the industry and can impact the availability of HSD in the country. Regulator should be fair to the industry and the consumers, however, they believe that the Ogra’s singular focus on price reduction is damaging the industry.

“We write with reference to our letter dated July 17, 2023, and the press release issued by Ogra on July 18, 2023, on the subject. We would like to express our profound concern regarding Ogra’s decision to issue a press release rather than seeking the industry’s perspective through a meeting or responding to OCAC’s aforementioned letter”.

On Tuesday, the Ogra issued a press release saying that the prices of petrol and diesel have been worked out strictly in accordance with the formula approved by the Economic Coordination Committee of the Cabinet on July 28, 2020 and accordingly reduction of Rs9/ltr in petrol and Rs7/ltr in diesel prices have been passed on to the general public on July 16, 2023.

The said ECC decision provides that in case of non-availability of PSO’s premium, freight or incidentals of the previous fortnight, the PSO’s previous month’s available incidentals of a fortnight will be applicable.

Copyright Business Recorder, 2023

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