LAHORE: The Oil Marketing Association of Pakistan (OMAP) has requested the chairman Oil and Gas Regulatory Authority (Ogra) to save the oil industry from upcoming severe financial crisis due to the rupee depreciation as immediate attention to the matter and required action implementation will prevent the industry from collapsing.
The Chairman OMAP Tariq Wazir Ali wrote a letter to chairman Ogra intended to highlight and request his prompt action towards the resolution of the issue. He further wrote that an immediate attention to the matter and required action implementation will prevent the industry from collapsing.
He said in a letter that the recent depreciation of Pakistan Rupee not only affected the country’s economy but the Oil industry as well. Tariq Wazir Ali further said that the industry which was already facing problems will now face loss of billions of Rupees as the rates of Letters of Credit (LCs) will be settled but the products had already been sold said adding although there is a compensation available in terms of foreign exchange losses allowed for LCs up to 60 days using PSO as a benchmark. But the industry has suffered since the increase in price announced on January 29, 2023.
The letter further reads, “There is a reason behind this suffering that PSO is settling its KPC HSD LCs not on announced 60 days but its own 30 to 45 days. Actual payable is cleared by GoP later if PSO settles its obligation in less than 60 days. This should be passed on to the general public so that the industry might decrease its losses.
We would also like to mention that previously, the Ogra used to put all the burden of Rupee depreciation on the industry instead of passing it to the end user which also caused several losses to the industry. So, the Ogra must pass out all the burden of exchange rates to benefit the industry because of the recent Rupee depreciation. This also contradicts the ECC approval for the same.
The OMAP also seek Ogra firm support to convince the banks to increase limits of trade finance / LCs as per current oil prices, volumes of companies and exchange rates, Chairman Tariq Wazir Ali said adding that Ogra should sup stand shoulder to shoulder with industry to ask SBP to take up the matter on urgent basis.
Seeking chairman Ogra’s attention towards another important issue, Tariq Wazir explained that the manoeuvring of Ogra in IFEM as there is a negative IFEM of Rs 10.70 per litre on HSD which is causing issues of working capital.
This is affecting the Oil industry financially. We would also like to highlight the issue of the calculation of this amount on purchases rather than sales. This is like the PDC discussion where the industry had correctly convinced Ogra to apply it based on actual sales so over/under application of this amount could be avoided.
The Ogra needs to pick up the issue on an urgent basis and we request to stop this practice immediately, he requested.
Copyright Business Recorder, 2023
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