ISLAMABAD-The Oil and Gas Regulatory Authority has failed to enforce the maintenance of prescribed storage of petroleum products by the oil marketing companies (OMCs), said petroleum division.

While briefing the Economic Coordination Committee (ECC) of the Cabinet, secretary petroleum informed OGRA was responsible to enforce maintenance of prescribed storage capacity of petroleum products by the OMCs, however, it has failed to do so, official documents available with the Nation revealed. The country had faced oil shortage during June and July this year as the OMC didn’t maintain their prescribed storage.

The Economic Coordination Committee of the Cabinet meeting had approved the revised pricing mechanism for petrol (motor gasoline) and high speed diesel (HSD) based on fortnightly plats average. 

The new price mechanism for petrol and high speed diesel (HSD) will be effective from September 1, 2020. As per the decision, the petroleum prices will be twice determined during a month. On each 1st and 16th of the month new prices will be effective. 

The decision will reduce the price risk from 30 days to 15 days incentivizing OMCs to import petroleum products and to avoid inventory loss.

Under the existing policy, prices of petroleum products are determined on monthly basis whereby refineries are allowed to fix and announce the ex-refinery sale prices.

This is subject to the condition that the ex-refinery price of the petroleum products cannot be more than the PSO’s average actual landed import price of the previous month (which is priced on C&F basis on a 5-day average of the Arab Gulf Market Platts price around the date of the Bill of Lading).

A committee constituted by the Economic Coordination Committee had proposed basing oil pricing mechanism on Platts average with fortnightly price revision.

The move was aimed at better planning for oil stocks, fair competition in oil industry, margins aligned with international pricing trends and smoothing out volatility of prices due to linking with Pakistan State Oil (PSO) import price.

The ECC’s committee in its report said that margins will be closely aligned with international pricing trend and smooth out volatility and distortions caused by PSO’s purchasing dates. 

It will help make advance three-month plans with refineries and Oil Marketing Companies (OMCs), lead to better inventory management and enhance reporting of sales arid enforcement of stock requirement.