Emerging OMCs seek CCP role in deregulation of fuels

KARACHI: Emerging oil marketing companies (OMCs) have recommended the top regulator to bring Competition Commission of Pakistan (CCP) on board for the deregulation of the oil sector to ensure a level-playing field for all the players in the market.

According to an official release, the emerging OMCs, which have relatively smaller market shares compared to the giants like PSO, Shell etc, floated this proposal in a meeting with Oil & Gas Regulatory Authority (OGRA) to discuss deregulation of petroleum products.

The consultative session was attended by OMCs, OCAC (Oil Companies Advisory Council), and OMAP (Oil Marketing Association of Pakistan).

The OMCs presented their point of view and the suggestions were discussed in detail in the first phase of the meeting. The second phase of the session shall

be held with refineries and other stakeholders to obtain their point of view

to develop the possible roadmap on

the way forward with the objective to develop final ToRs (terms of reference)

for deregulation, the OGRA statement stated.

The government has decided to deregulate the prices of petrol and diesel and the margins of OMCs and dealers and OGRA has been tasked to work out its modalities in consultation with the stakeholders.

One of the participants of the

meeting said emerging OMCs raised

their reservations about the open competition, in which major OMCs would be at an advantage at the cost of new smaller OMCs.

The industry officials emphasised that emerging OMCs anti Competition rights and constraints must be considered and safeguarded, suggesting that CCP should be kept in the loop to address the competition issues of the sector.

“First of all petroleum policy and OGRA rules should be reviewed and amended wherever needed on priority basis as IMF has asked to decentralise the pricing control,” officials said.

The OMAP also proposed consumer courts’ protection for OMCs own pricing and also called on the government to allow inter-OMCs sales.

Under the deregulated regime, petroleum prices would vary from city to city. Currently, the government keeps prices uniform across the country through the Inland Freight Equalization Margin (IFEM).

The OMCs also advised the government to rationalise the storage plan as per the convenience of OMCs, which must be allowed to change the depot locations if needed by removing restrictions on IFEM (Inland Freight Equalization Margin) facility.

It also sought the permission to

establish retail stations throughout

the country irrespective of storage developed in any province after deregulation by allowing the international suppliers to store their products anywhere in Pakistan.

It also suggested that both OMCs and dealers’ margins must be fixed and the IFEM be abolished.

Another official said five local refineries – Pak-Arab Refinery, National Refinery, Attock Refinery, Cnergyico, and Pakistan Refinery would meet up at the OGRA office on September 12 with inputs for deregulation of the sector.

Industry officials said the long-awaited refinery policy was also linked to deregulation of the oil sector and was expected to materialise by November 01, 2022.