Thursday September 28, 2023

Govt directs OGRA to keep OMCs’ retail outlets stocked

September 13, 2023

KARACHI: The government has asked the oil regulator to ensure that all retail outlets of oil marketing companies (OMCs) are well stocked with petroleum products to avoid any shortage in the country, a letter seen by The News showed on Tuesday.

The Petroleum Division stated in a letter written to the Oil and Gas Regulatory Authority (OGRA) chairman that the energy minister has taken serious notice of the reports of dry retail outlets of OMCs at a few locations and directed that OGRA should mobilise its enforcement teams to ensure that all the OMCs kept their retail outlets stocked and well supplied with petroleum products.

The latest development came after Pakistan State Oil (PSO) drew the attention of authorities that except a few OMCs, others were not importing high speed diesel (HSD) and petrol, and were mostly relying on its imports of these products.

The PSO stated that this situation might lead to a crisis of HSD and petrol as it would not be able to import these products solely for domestic need, sources said.

They also said that except two or three OMCs, other OMCs stopped importing HSD and petrol products citing the high premium they had to pay for imports compared to the PSO.

The state-owned OMC pays low premium due to its contract with Kuwait Petroleum Corporation (KPC), which gives PSO an advantage in relation to other OMCs.

The oil sector people however did not see any justification in the reasons given for not importing by most of the OMCs, as PSO’s contract with KPC was 50 years old.

They said that this situation has developed because of licenses given to OMCs without having solid financial background.

Sources pointed out that many of these companies were enjoying when duty free petrol was being imported from China. These company’s earned windfall profits, but were now giving “lame excuses” to not import the needed petroleum products.

Oil sector sources pointed out that real problem lies on part of smaller OMCs because they did not import and mostly rely on the imports made by PSO. They said that the latest letter of the Petroleum Division has been sent to OGRA to keep the outlets of all OMCs stocked because as per OGRA / OCAC daily reports, there are sufficient stocks of MS and HSD in the country.

Therefore, any hoarding attempt needs to be curbed strongly. Moreover, regulatory action may be taken against any OMC(s) maintaining stocks lower than mandatory requirement so as to avoid any shortage in the country, they said.