OCAC Accuses Aramco Backed GO for Unfair Market Practices
By Newztodays Team:
Oil Companies Advisory Council (OCAC) has accused Aramco backed GO for the unfair market practices at cost of oil industry and approaches the Ogra regulator raising serious concerns, calling for action against it.
Adil Khattak Chairman Oil Companies Advisory Council (OCAC) a body of oil industry in a letter sent to Chairman Oil and Gas Regulatory Authority Masroor Khan said had referred to the correspondence from refineries dated June 13, 2024, and the discussions held in the Product Review Meetings for June, July, and August 2024 regarding the unjustified additional imports of HSD into the country.Commerce Minister Jam Kamal Khan Pushes DGTO to Boost Trade Advocacy, Modernization
The unjustified HSD imports by an OMC, which started at 15,000 MT per month, have alarmingly increased to 40,000 MT per month. This influx of product is being distributed in the market through unfair practices.
The Ogra had allowed the import of high speed diesel to Aramco backed Go which OCAC had believed that it resulted in unfair market practices.
Despite opposition from local oil refineries carrying surplus products and renting additional storage, he said that OGRA continues to approve additional HSD imports by the private OMC without acknowledging the true demand of the country, which is already deeply impacted by cross-border movements.
He said that capital injection and investment in an Oil Marketing Company should not come at the expense of the local industry by allowing unnecessary imports under various pretexts. This practice contradicts the established norm of prioritizing upliftment from refineries and puts additional pressure on Pakistan’s foreign exchange reserves.
He said that the private oil marketing company in question has been offering oil at a discount of around Rs. 10 per litre, a figure exceeding the OMCs’ margin of Rs. 7.87 per litre. This heavy discounting is eroding the legitimate market share of other companies and leading to the illegal dumping of the company’s product at other companies’ stations through the lure of hefty discounts.
It should be noted that these discounts have not resulted in lower prices for consumers at petrol stations and cannot be considered a public benefit,” he said adding that given these circumstances, it is imperative that OGRA thoroughly investigates how any private company can offer such substantial discounts beyond its margins.
Furthermore, there are reports suggesting an influx of smuggled petroleum products into Pakistan, raising the possibility that these discounts may be connected to such smuggled products.
Although the ultimate responsibility and authority to grant approval for imports rest with OGRA—a point often reiterated to the industry in Product Review Meetings—we urge OGRA to ensure the survival of the local oil industry in the national interest,” he said adding that any OMC refusing to uplift product from refineries and imposing unreasonable commercial terms should not be accommodated through additional imports.
It is worth mentioning that PSO canceled around 450 KT of HSD imports since January 2024 to support refineries in a highly depressed demand regime.
Going forward, no non-KPC imports should be allowed, and any OMC requesting to import HSD should be directed to coordinate with the refineries and uplift the product from them, especially if their upliftment commitments from the past months have not been honored,” Chairman OCAC said adding that the blatant disregard for the actual demand within the country undermines the local industry, resulting in the aforementioned unfair practices. Prioritizing unjustified imports over refinery upliftment exerts undue pressure on Pakistan’s foreign exchange reserves.
The oil industry, including the refineries, expresses deep concern and dissatisfaction over the current situation, which fosters unfair competition and negatively impacts the industry,” chairman OCAC said adding that We express our serious concerns and strongly urge OGRA to investigate this matter diligently and take necessary actions to protect legitimate businesses and the industry in Pakistan.
He has called for a prompt and effective intervention from OGRA to resolve this critical issue without delay.
