Ogra cracks down on petroleum smuggling

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has requested the detailed records of petrol and high-speed diesel (HSD) supplies from refineries to oil marketing companies (OMCs) as part of the government’s renewed effort to combat the smuggling of petroleum products in the country.

The federal government has established a committee to tackle smuggling and address the revenue losses associated with it, according to a recent letter from Ogra to the country’s refineries. Ogra has asked refineries to provide details of petrol and HSD supplies to OMCs from January to August of this year.

This new governmental initiative to curb petroleum smuggling comes at a crucial time, as revenue loss remains a significant concern for the government, which is in urgent need of financial resources, sources in the oil sector said.

The sources also emphasized that the smuggling of petroleum products has complicated operations for both the refining sector and OMCs. They noted that the information requested by Ogra will help clarify what is actually supplied to OMCs versus what is sold by petroleum dealers at their outlets.

It was noted that while the supply of petroleum products from refineries to OMCs is well-documented, there is concern that OMCs may not be directly involved in smuggling. Instead, the issue may lie with dealers who mix smuggled products with legal ones and sell them. The new government measures aim to verify the actual supply levels and sales at retail outlets.

According to industry sources, the legal sale of HSD is approximately 16,000 metric tonnes (Mt) per day, while petrol sales are around 22,000 Mt per day. Smuggled petroleum products are estimated to have captured 30 to 40 per cent of the domestic market, and smuggling continues despite previous efforts to address the issue.

In August of this fiscal year, petroleum product sales fell to 1.22 million tonnes (Mt) from 1.41 Mt in August of the previous fiscal year, marking a 14 percent drop. On a month-to-month basis, there was a 2 percent increase in sales from July to August of this fiscal year.

Over the first two months of this financial year, petroleum product sales declined significantly by 12 per cent, totalling 2.41 Mt compared to 2.76 Mt during the same period last fiscal year.