The Oil Companies Advisory Council (OCAC) has warned that the Oil and Gas Regulatory Authority’s (OGRA) singular focus on fuel price reduction is damaging the industry.
“We write with reference to our letter no. OGRA-520 dated July 17, 2023, and the press release issued by OGRA on July 18, 2023, on the subject. We would like to express our profound concern regarding OGRA’s decision to issue a press release rather than seeking Industry’s perspective through a meeting or responding to OCAC’s aforementioned letter,” the Council wrote in its letter to OGRA Chairman.
OCAC reiterated that the essence of ECC’s decision no ECC-307/34/2020 dated July 28, 2020, was to ensure that the Industry gets an accurate recovery for inventory that has been acquired on the rates prevailing in the previous fortnight; OGRA, through above-mentioned Press Release, has claimed that “ECC decision has been applied in letter and spirit”, but the Council does not agree.
“OGRA has completely ignored the fact that this application of a new HSD premium has caused huge and unjustified loss to the Industry. We understand that this distorted application of the ECC decision has been done to reduce the price at the cost of the Industry and a similar approach would not have been taken in case the Premium was increasing,” it argued.
OCAC pointed out that over time, some adjustments have been made which were not in line with the pricing formula and were detrimental to the Oil industry, a few major examples are as under:
- 2nd Fortnight November 2022-OGRA made the following unjust adjustments to avoid the price increase
IFEM was reduced by Rs. 3.21 & Rs. 2.72 per liter on MS & HSD, respectively. Moreover, Exchange Loss Adjustment was reduced by Rs. 3.01 & Rs. 2.11 per liter on MS & HSD, respectively.
Revision of OMCs’ Margin on Motor Fuels was approved by ECC on October 31, 2022, for both MS & HSD; this revision was not incorporated in prices.
- 1st Fortnight August 2022-treatment of Exchange Rate in pricing was changed in price computation for August 1, 2022; the Average USD Exchange Rate was used instead of Rate applicable on the last working day.
The Council opined that the impact of this change without the actual import of HSD at a reduced Premium will cripple the Industry and can impact the availability of HSD in the country. “We expect the Regulator to be fair to the Industry and the consumers, however, we believe that OGRA’s singular focus on price reduction is damaging the Industry,” it added.
OCAC requested an urgent meeting with representatives from the Industry to thoroughly assess the matter based on factual evidence, mitigate the potential impact on future pricing and reach a mutually agreeable resolution.
