Ogra allows HSD imports despite refineries opposition

KARACHI: The Oil & Gas Regulatory Authority (Ogra) has allowed for the import of 130,000 million tonnes (MTs) of high speed diesel (HSD) despite stiff opposition from refineries.

During the product review meeting, Ogra allowed Pakistan State Oil (PSO) to import 90,000MT HSD and Gas & Oil company (GO) to import 40,000MT during the month of March on the basis that demand for HSD would go up to 650,000MT, 550,000MT of which would be met through local production and the remaining through imports.

Refineries, however, rejected Ogra’s projection as the current demand for HSD is around 11,000MT per day, which would come to around 450,000MT for the month of March, and could be easily met through local production.

The sources privy to the meeting said that Ogra did not agree with the refineries’ contention and allowed two OMCs to import 130,000MT during the month.

According to sector experts, Ogra projections are not based on ground realities as HSD demand is very low and is not expected to pick up. They said that even given the highest percentage of HSD consumption ie 20 per cent compared to the present situation the demand could be easily met through local production.

The refining sector already wrote a letter last week to the Ogra chairman, highlighting serious challenges in sustaining operations due to failure of OMCs to uplift committed quantities of products.

Refineries pointed out that the country’s MS and HSD sales have fallen short by 20 per cent and 31 per cent, respectively, during the February 1-9 periods, against the projected demand for the month. This situation necessitates an immediate reassessment of import cargoes for both products.

Although OMCs are importing MS and HSD according to plan, the refineries are facing significant product upliftment issues as their committed volumes have not been uplifted by OMCs, the letter added. As such, imports have not been adjusted to align with actual sales trends, which is transferring all the demand shortfall issues on the refineries.

Consequent to reduced sales and unadjusted imports, the stock days cover for MS and HSD currently stands at 36 days and 39 days, respectively, refineries pointed out and added that lack of rainfall in the country will likely affect HSD sales in the coming months due to delays in the harvesting season. This, combined with the fact that it coincides with the holy month of Ramazan -- during which sales of both MS and HSD are typically lower -- will put additional pressure on refinery upliftment, if imports have not been reassessed and curtailed to reflect stocks and sales trends.