Infrastructure constraints at key ports choke oil industry: OCAC

KARACHI: The oil sector has identified infrastructure constraints and vessel congestion at Karachi Port Trust (KPT) and Fauji Oil Terminal & Distribution Company Limited (FOTCO) as major hurdles, leading to demurrages and delays, according to a document from the Oil Companies Advisory Council (OCAC).

The document proposes refurbishment of KPT jetties and explores options for public-private sector partnerships. It also suggests capacity enhancement at ports and a new oil import facility at Hub, Balochistan.

In giving the proposals about the improvement at FOTCO, OCAC suggested the laying of separate/dedicated tanker discharge lines, each for Motor Gasoline and High Speed Diesel (HSD) cargoes, and the availability of “complete” night navigation at FOTCO/Port Qasim Authority (PQA) for empty and loaded vessels.

It also suggested the shifting of Condensate/Naphtha vessels for exports from PQA/FOTCO to Keamari/KPT in line with the Ministry of Energy (MoE) directive and recommended that FOTCO be converted into a purely finished product/fuels jetty.

The oil body also suggested expediting the implementation of the channel widening plan of PQA for LNG vessels and the construction of an additional petroleum jetty at Port Qasim according to the Berthing SOP protocol.

Regarding its recommendations for the downstream oil industry, the oil sector organization suggested reviewing the price structure every fiscal year by covering all incidental costs, forex adjustment, temperature losses, updated stock financing cost, infrastructure cess, turnover tax, LC confirmation charges, demurrage, digitization/telemetry system, etc.

It also proposed the complete deregulation of petroleum products and IFEM and the adoption of the last day exchange rate before the pricing period.OCAC also sought the recovery of pending Petroleum Differential Claims (PDCs) from 2004-2008, which amounted to Rs 10 billion, and outstanding GST claims of 65 billion. It also called for the abolishing of the provincial taxes on regulated products and for the robust implementation of rules to curb the inflow of smuggled products.

OCAC also called for the closure of 2,500 illegal retail outlets immediately (impacting government revenue through the illegal flow of product, HSE risks, etc.) and for the rolling out of new explosives rules and the removal of non-aligned rules/standards between the Oil & Gas Regulatory Authority (OGRA) and explosives.

Regarding the renewal of licenses by the regulator, the oil sector body suggested that oil marketing companies (OMCs) having marketing licenses issued by the Ministry of Energy (Petroleum Division) before the promulgation of OGRA should have their licenses extended by OGRA for a 30-year period as per the initial application. It also suggested the building of strategic stocks to ensure energy security.