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Monday May 20, 2024

OGRA directs oil companies to step up diesel uplift to meet surging demand

By Tanveer Malik
May 14, 2024
The Oil & Gas Regulatory Authority (OGRA) headquarters. — APP/File
The Oil & Gas Regulatory Authority (OGRA) headquarters. — APP/File

KARACHI: The Oil & Gas Regulatory Authority (OGRA) has directed oil marketing companies (OMCs) to increase high-speed diesel (HSD) uplift from refineries to meet surging demand during the harvesting season and to maintain a smooth oil supply chain.

OGRA issued the directives after it was reported that the uplift of HSD has not seen substantial growth despite the action against the smuggling of Iranian diesel in recent weeks. According to the OGRA letter written to the OMCs, the harvesting season in the country has reached its peak, leading to a significant surge in the sale of diesel across Pakistan. "This heightened sale requires that every stakeholder in the National Oil Supply Chain operates with maximum efficiency and coordination to ensure the flow of fuel to the consumers," noted OGRA.

The regulatory body advised OMCs to improve their uplift to prevent any back pressure and ullage issues at the refineries and to optimize the national oil supply chain."The uplift of HSD has been low in the last few days in anticipation of a cut of more than Rs8 in the price of HSD in the next fortnightly review of prices," said Adil Khattak, Chairman of the Oil Companies Advisory Council (OCAC).

Talking to The News, Khattak said that HSD is not being uplifted in a major quantity as OMCs want to avoid inventory losses, which is the usual norm.Khattak said that in recent days, the uplift of HSD has surged due to anti-smuggling measures, and the demand has gone up due to the harvesting season. He said that the smuggling of Iranian diesel has not stopped completely, which otherwise would have pushed up its demand manifold.

Currently, OMCs are not uplifting HSD in large quantities after the expectation of a substantial cut in the price of HSD to avoid inventory losses.Regarding the pricing of petroleum products, Khattak said that the fortnightly review of prices is not ideal because, after every two weeks, speculations and rumors start about their prices, which disturb the supply chain of petroleum products.

According to oil sector estimates, HSD demand from the formal sector has doubled in recent days. The first ten days of May saw a surge in the demand for HSD, with daily sales jumping to around 29,000 tonnes, nearly double the average of 15,000 tonnes per day in the previous months.