Emerging OMCs accuse OGRA of shirking regulatory responsibilities

KARACHI: Emerging oil marketing companies (OMCs) have accused the Oil and Gas Regulatory Authority (OGRA) of deflecting from its responsibility to resolve the problems of the oil sector companies.

Oil Marketing Companies Association of Pakistan (OMAP), the representative body of emerging OMCs in a letter written to the OGRA chairman on Thursday noted that the response of the regulator to their complaints has always been disheartening and contrary to the statutory role of OGRA. Empowered to regulate no less than $35 billion oil Industry, the letter said that emerging OMCs felt helpless and stranded because of OGRA’s “non-cooperative and stiff-necked team”.

OMAP has repeatedly communicated the urgent need for resolving matters such as the adjustment of foreign exchange losses, price mechanism formula, OMC margin revision, smuggling of Iranian diesel, and OMC licenses renewals. These issues fall directly under the purview of OGRA, being the regulatory authority fully empowered and responsible for the oversight and management of the petroleum sector.

“While we understand the complexities and challenges faced by the regulatory bodies, it is disconcerting to note that OGRA has consistently deflected responsibility and unshouldered it upon other departments to address these crucial issues,” the OMAP letter said.

As the regulatory authority entrusted with the mandate of fostering competition, increasing private investment and ensuring growth of the petroleum industry, OGRA should resolve all the above-mentioned matters instead of passing the buck, OMAP stated.

Let’s take the example of the recent letter of DG Oil, Ministry of Energy (Petroleum Division) dated June 14, 2023 wherein it categorically narrates that vide SRO 254(1) 2006 dated March 15, 2006 the powers under clause (e) and clause (g) of rule -3 of Petroleum Products (Petroleum levy) Rules 1967 in respect of margins (OMCs and dealers) shall be exercisable by OGRA with effect from April 1, 2006.

OMAP said this letter showed OGRA’s wilful refrain from exercising its powers by putting the ball in another department’s court. OMAP accused OGRA is “trying to escape” from its legal responsibilities for the reasons best known to the regulator.

OGRA in response to the OMAP letter said that it has perused the concerns raised by the OMAP in their recent letter published in print media. “We understand the importance of fostering a collaborative environment for the betterment of the petroleum industry in Pakistan,” it noted.

“We would like to assure all stakeholders that OGRA is fully committed to its role as a regulator and is actively addressing the issues being faced by the oil and gas sector.

We recognise the significance of resolving matters such as FX losses adjustment, price mechanism formula, OMC margin revision and smuggling of Iranian diesel, which fall within the purview of the federal government,” it stated.

It has been observed in the recent past that as soon as the oil industry takes up a matter with the regulator, which is a quasi-judicial body, the industry circulates the letters to various newspapers. OGRA called this “counterproductive” as it did not lead to the resolution of the issues at hand. Instead, the regulator said that such tactics had an opposite effect to the one intended or desired.

The oil sector regulator also assured that while it understood the concerns expressed by OMAP regarding previous engagements, it was actively working towards finding effective solutions.

“We have been collaborating closely with the Ministry of Petroleum and other industry stakeholders to address the challenges to create a conducive environment for the industry’s growth,” the regulator said.

OGRA recognised the importance of private investment and the impact it has on the petroleum industry and the overall economy. “We are committed to fostering competition, attracting foreign direct investment, and ensuring the well-being and growth of the sector,” it reminded.