Smaller Petrol Companies Complain to OGRA About Unfair Treatment

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More than a dozen smaller oil marketing companies (OMCs) claim to have suffered massive losses as a result of extortionate petroleum pricing and marketing conditions and have blasted the Oil and Gas Regulatory Authority (OGRA) for its failure to maintain order.

The Oil Marketing Association of Pakistan (OMAP) said in a letter, “The entire industry, barring state-run Pakistan State Oil (PSO), is facing an existential crisis and this is mainly driven by lack of coherent policy by OGRA”.

It said OGRA had frequently failed to settle foreign exchange losses adjustment, negative inland goods equalization margin, pricing, oil companies’ margin revision, and other related issues.

OMAP also objected to unfair and unjustified working conditions and the distribution of foreign exchange losses to OMCs. It accused the OGRA chairman of clear bias towards the big players, which is not only unfair but also contradicts the very purpose of the regulator.

The OMCs claim that roughly Rs. 25 billion in overall losses due to a lack of coverage of foreign exchange adjustment in pricing and claimed that larger players, particularly those in the public sector, were given preferential treatment.

OMAP says the regulator’s failure to address issues was causing significant distress to small OMCs that are struggling to compete with the market’s established players. “The record is evident that OMAP is repeatedly knocking doors of OGRA and petroleum ministry to adopt an efficient mechanism for FX (foreign exchange) losses disbursement to ensure that each penny of national money goes to the true and eligible entities…,” the association noted.

OGRA responded that such accusations were false. It stated that the regulator, along with the federal government, was adhering to the approved policy guidelines by which PSO’s import cost was actualized upon the retirement of letters of credit, and the differential is loaded in subsequent prices by the federal government with a view to passing on the actual cost to oil marketing companies and general consumers in Pakistan.

According to the regulator, prices are set by the federal government every two weeks and announced by the finance ministry in conjunction with the petroleum ministry and OGRA, so any change in policy is the sole domain of the federal government.

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