The Pakistan State Oil (PSO) has urged the government to fix fuel supply quota for oil refineries, based on average three-year market share, within the proposed de-regulated price mechanism to ensure product availability to all oil marketing companies (OMCs)," Business Recorder has learnt.
The Economic Co-ordination Committee (ECC) of the Cabinet has already approved de-regulation of inland freight equalisation margin (IFEM) and the Ministry of Petroleum is currently working on de-regulation of prices of petroleum products. PSO has said that refineries-backed OMCs fuel allocation quota should be restricted to 25 percent of their own production to prevent market abuse, which would provide level playing field to all OMCs.
The Ministry of Petroleum and the Oil and Gas Regulatory Authority (Ogra) are already at loggerheads over the proposed deregulation of price of petroleum products as the latter wants to retain fuel supply allocation power. "Ogra must be given refinery supply allocation powers pursuant to Bhagwandas Commission Report to ensure that the OMCs, owned by the refineries, may not get an unfair advantage over others," sources said, quoting Ogra stance. At present, three oil refineries--Parco, ARL and Bosicor--own OMCs.
Ogra has sought empowerment to fix maximum sale price of petroleum products in case of overcharging to prevent market abuse by oil refineries. Ogra has also expressed inability to perform the functions of monitoring and enforcement without amendments to the Ogra Ordinance. Ogra stated that if the price is deregulated, its role would be automatically restricted. However, the Authority maintains that under the present law and statutory provisions of Ogra Ordinance and the Pakistan Petroleum Rules, 1971 (the rules), Ogra can not carry out monitoring role.
According to Ogra, complete deregulation can only be possible subsequent to the proposed amendment in Ogra law that would include the following: (i) all OMCs/refineries must be bound under ECC/Cabinet decision to provide petroleum products pricing data, in explicit detail and Ogra shall have powers to intervene in case of overcharging and fix the maximum sale price to be followed by OMCs in such exceptional cases; (ii) all OMCs will provide detailed transportation costs; (iii) IFEM movements are to take place based on nearest depots and most economic mode concept; and (iv) current cartage rate mechanism will stay in place.