LAHORE: Oil and Gas Regulatory Authority is deliberately trying to create unrest among the Oil Marketing Industry by setting up the prices of petroleum products without consultation with the stakeholders.
According to a letter written to chairman OGRA by Oil Marketing Association of Pakistan, the authority is creating unrest among the oil marketing companies by setting up the prices of petroleum products without consultation with the OMAP and without taking in to consideration the view point of the industry. The authority had not shared any written SOP’s regarding price change formula.
As per the letter, since the OGRA had already revised the formula for calculating the exchange rate for oil price revision i.e. the exchange rate of the last day but now it has now revised the formula and started taking the average exchange rate. On August 1, the last day exchange rate was Rs.250 but the government took the average exchange rate of Rs 225 to reduce the oil prices which is neither prudent nor workable.
The recent revision of oil prices, as per an average exchange rate, would have resulted in an exchange rate adjustment of Rs. 31/liter for petrol and Rs. 16/ liter for high-speed diesel, but only Rs. 8.02/ liter exchange rate adjustment for petrol and Rs. 3.63/liter in case of high-speed diesel has been allowed which is neither prudent nor acceptable.
“According to the existing oil price review mechanism, the Government takes Pakistan State Oil Limited (PSO) prices to set new rates of petroleum products in the country. In the fresh oil price determination, PSO had worked out an exchange rate adjustment of Rs. 31/liter for petrol and Rs. 16/liter for high-speed diesel. It was supposed to be passed on to the consumers but it was turned down in order to cut oil prices and pass on minimum impact to consumers,” says a letter.
Oil Marketing Association of Pakistan demanded that OGRA should consider the recommendations of OMAP before finalizing the pricing mechanism. The association also demanded that C&F adjustment working should be shared with the industry. PSO C&F Adjustments complete working be shared with industry before every price change.
The association further demanded that average HSD Premium quoted to top five (05) OMC, except PSO, may be considered for pricing in the country as PSO is working on Government-to-Government premiums which are far below the industry’s average premium. Extra margin on HSD Premium earned by PSO may be recovered through IFEM mechanism.
They also demanded that last day USD Exchange Rate published by SBP application may be applied for calculation of Prices. It is further pointed out that in case the necessary recommended steps are not taken in the light of the above, the already staggering oil industry will be near to complete collapse and OMCs may not be held responsible for the resultant ugly scenario. We fear the lifeline supply chain of petroleum products may be severely affected and the whole country will suffer irreparable loss.
Copyright Business Recorder, 2022