The Oil & Gas Regularity Authority (OGRA) has suggested the development of large storage facilities for petroleum products to deal with sudden price hikes in the international market.
OGRA tabled this proposal during the meeting of the Senate Standing Committee on Petroleum that was held on Thursday in Parliament House under the chairmanship of Senator Abdul Qadir.
According to details, OGRA representatives argued that the development of large storage facilities for petroleum products like India, China, and the US would save consumers from directly facing the impact of an abrupt increase in the prices in the international market.
Since there are no such government-managed storage facilities in the country, OGRA has always been forced to pass on the impact of the global petroleum prices to domestic consumers proportionately.
However, industry experts strongly opposed OGRA’s proposal, arguing that there is no practical use of such storage facilities for petroleum products and such projects are economically unfeasible.
On the other hand, the Oil Companies Advisory Council (OCAC), a representative organization of downstream oil industry formed by refineries, oil marketing companies (OMCs), and a pipeline company, has claimed that it is the responsibility of the government to build and maintain large storage facilities for petroleum products as strategic reserves.
Speaking in this regard, Chairman OCAC, Zahid Mir, said that OMCs are required to maintain a 21-day inventory under OGRA laws but they cannot increase the storage capacity beyond this limit due to financial constraints.
He added that the US, China, and India release petroleum products from these strategic reserves whenever prices in the international market surge and fill up these reserves whenever prices in the international market plunge.
Chairman OCAC also noted that only crude oil could be stored in these large storage facilities. However, the government must raise the refining capacity of the industry to produce refined products. Otherwise, building these strategic reserves would be a pointless exercise.