ISLAMABAD: The issue of lower uplifting of diesel by the Oil Marketing Companies (OMCs) is mainly because of the influx of smuggled Iranian diesel in the market, which resulted in significant variation from the planned sales, and ultimately led to supply glut.
The Islamabad Policy Institute Tuesday stated that the demand of diesel reduced in the market, and the building up of inventories was unavoidable. Some quarters have begun suggesting that the situation emerged because of the new fortnightly oil pricing mechanism, notwithstanding the fact that the new arrangement is good for refineries, the OMCs, and the consumers alike.
Refineries and OMCs, the IPI emphasised, had been facing the same risk of inventory losses under previous monthly pricing mechanism. The think tank, which works on energy sector, cautioned that wrong assessment of the situation and ad hoc remedial measures by the relevant authorities would not address the emerging crisis-like situation, which could potentially disrupt oil supply chain in the country.
It should be recalled that local refineries had earlier warned about impending shutdown with their tanks filling up due to low uplifting of refined products especially diesel by the Oil Marketing Companies. "The situation, if not addressed urgently, could impact refinery throughput and affect local crude fields also. It could soon start impacting furnace oil availability," Dr Ilyas Fazil, distinguished fellow at the IPI said.
Refineries are finding themselves in the situation because their group OMCs and the companies with whom they have long-term arrangements are not lifting their products. Resultantly, Ministry of Energy's Petroleum Division, is forcing the OMCs, which do not have local contracts, to cancel their import orders and buy from the local refineries. "MoEPD seems to be playing the same card as in June, namely blame game rather than proactively resolving issues," Dr Fazil regretted.
Copyright Business Recorder, 2020
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