Hike in dollar value inflicts loss of Rs32b on OMCs

ISLAMABAD: Pakistan’s oil marketing companies (OMCs) have braved the mammoth loss of Rs30-32 billion over the year because of massive hike in dollar’s value that at one time have surged up to Rs166.

Though it has tumbled to Rs156.60 on Thursday, but it is still too higher. The dollar’s value stood at Rs106 after interim government and since then it hiked to Rs156.60 owing to which OMCs experienced the huge loss.

The Oil Marketing Companies (OMCs) to his effect have managed the intervention of the Petroleum Division asking for the initiatives to offload the said loss, a senior official told The News.

When contacted, Spokesman for Petroleum Division Additional Secretary Sher Afgan confirmed the development saying that two days before Ogra official came to the Petroleum Division and with them, this case was taken up, but no result came out yet. “We have to pursue it more.”

However, the DG Oil office, the official said, built the case of OMCs for compensating the loss to this effect and wanted to include in the POL prices for consumers the loss of OMCs and the top mandarins of the Petroleum Division pitched this case before Oil and Gas Regulatory Authority (Ogra) team, but, the regulator has told oil marketing companies in plain words that it is not ready to pass on to consumers the loss amounting to Rs30-32 billion OMCs braved on account of exchange rate loss over the year. Ogra says that it is not the mandate to accommodate the OMCs other than Pakistan State Oil.

The Oil Marketing Companies (OMCs) that mainly include Pakistan State Oil (PSO), Shell, Go and HESCOL have braved loss almost Rs30-32 billion so far in last one year because of exchange rate loss as the US dollar has appreciated too much.

Ogra only determines the petroleum products’ prices of PSO. It also argues that the companies purchase the petroleum products on 40, 45 and 90 days credits meaning by that they purchase the petrol from international market and pay back after 40, 45 or 90 days meanwhile the dollar if appreciates, Ogra is not responsible to compensate them.

Ogra said that dollar value is not under control of the regulator saying OMCs deals are purely business deals and if they want to avoid the loss, they should better purchase the POL on cash and sell them in Pakistan market. And if they buy POL from international market on 40-90 days credit, at the time of payment if dollar appreciates, it is their choice and business deal and in this case what’s the fault of consumers to pay the loss incurred on OMCs because of the exchange rate loss.

“We already consider the exchange rate of last day of the month to help avert the exchange rate loss of PSO and not more than that,” a senior official at Petroleum Division told The News while quoting Ogra official point of view.