The Oil & Gas Regulatory Authority (OGRA) has instructed oil marketing companies (OMCs) to pick up more high-speed diesel (HSD) from local refineries to ensure a smooth fuel supply in the upcoming peak harvest season.
HSD uplift had failed to budge despite the notable reduction in smuggled Iranian diesel. In a letter to the OMCs, OGRA highlighted that the harvesting season has led to a substantial surge in diesel sales across Pakistan. The regulator urged coordination from all stakeholders to ensure uninterrupted fuel supply to consumers, reported a national daily.
OGRA directed OMCs to procure more HSD in order to avoid storage issues at refineries and maintain supply during the harvesting season.
Notably, OMCs were against the procurement of large quantities of HSD with rates poised to fall in the upcoming review of fuel prices.
However, recent anti-smuggling measures have improved HSD stocks of OMCs. Currently, OMCs are cautious about uplifting large quantities of HSD, anticipating significant price cuts to avoid inventory losses.
Oil sector estimates indicate that HSD demand from the formal sector has doubled recently. The first ten days of May saw daily HSD sales jump to around 29,000 tons, nearly double the average of 15,000 tons per day in recent months.
Stop the smuggling racket and we’ll see off-take of all fuel products increase. This is an impossible ask as there is simply far too much money being made by ALL participants in smuggling.
Season has subsided already. Border controls are weak. Margins are squeezed with every price increase, so to have good margins dealers are forced to buy and sell Smuggled Products. This sector needs special care otherwise this would not stop and the National Exchequer would be bearing losses as always.