The Oil Companies Advisory Council (OCAC) has urged the Oil and Gas Regulatory Authority (OGRA) to thoroughly investigate the issue of unjust and unnecessary imports of High-Speed Diesel to ensure the survival of Pakistan’s petroleum industry.
The demand to this effect is contained in a recent letter sent by the OCAC Chairman, Adil Khattak, to the OGRA Chairman.
The OCAC Chairman informed the OGRA chief in the letter that the unjustified HSD imports by an Oil Marketing Company, which started at 15,000 MT per month have alarmingly increased to 40,000 MT per month and the product influx is being distributed in the market by employing unfair practices.
Despite opposition from local oil refineries carrying surplus products and renting additional storages, the 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 the cross-border movement, said the OCAC Chairman.
He said the capital injection and investment coming into an OMC should not be done at the cost of local industry by allowing unnecessary imports on one pretext or the other.
“It not only contradicts the established practice of prioritizing uplifting from refineries but also places additional pressure on Pakistan’s foreign exchange reserves,” said Khattak.
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, he said.
This hefty discount is not only eroding the legitimate market share of other companies but is also leading to the illegal dumping of the company’s product at other companies’ stations through the lure of hefty discounts, said the letter.
It should be noted that these discounts have not translated into lower prices for consumers at petrol stations and cannot be considered a public benefit.
Given these circumstances, it is imperative that OGRA thoroughly investigates how any private company can offer such substantial discounts beyond its margins, said the OCAC Chairman.
Further, reports are suggesting an influx of smuggled petroleum products into Pakistan, raising the possibility that these discounts may be connected to such smuggled products, he said.
“Although the ultimate responsibility and authority to grant approval for imports rests with OGRA, a fact which is reminded to the industry time and again in Product Review Meetings, we urge OGRA to ensure survival of the local oil industry in the national interest. Any OMC refusing to uplift product from refineries and imposing unreasonable commercial terms should not be accommodated through additional imports,” said the OCAC chief.
It is worth mentioning that PSO cancelled around 450 KT HSD imports since January 2024 to support refineries in a highly depressing 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 uplift commitments from the past many months have not been honoured.
The blatant disregard for the actual demand within the country undermines the local industry resulting in above mentioned unfair practices and prioritizing unjustified imports over refinery uplift 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. We express our serious concerns and strongly urge OGRA to investigate this matter diligently and take necessary actions to protect the legitimate businesses and industries in Pakistan,” the letter concluded
OCAC urges OGRA to thoroughly probe into unnecessary HSD imports to ensure oil industry’s survival
