LAHORE: The Oil Marketing Association of Pakistan (OMAP) has urged the government to remove the 20-day stock cover requirement and allow companies to set their own inventory levels, promoting competition and preventing monopolies.

In response to a letter from Ishfaq Ahmed, Deputy Director (F&P) at the Directorate General (Oil) Ministry of Energy (Petroleum Division), OMAP submitted its input on the implications of deregulating Pakistan's petroleum products market.

According to the letter written by OMAP Chairman Tariq Wazir Ali to the Ministry of Petroleum (Energy Division), while deregulation may offer potential advantages, it also poses significant challenges and risks. The market is currently dominated by three major Oil Marketing Companies (OMCs), controlling over 70% of the market share, which could lead to unfair competition, cartel-like behavior, and price manipulation, ultimately affecting consumers.

Experts warn of additional challenges, including the risk of hoarding, smuggling, and substandard retail outlets, as well as potential negative impacts on retail outlets, rural areas, and consumer prices. To mitigate these risks, they recommend that the government take measures to prevent unfair practices and ensure a level playing field. These measures include, curbing smuggling and preventing the entry of unidentified products into the market, implementing molecule tracing and digitization to prevent hoarding and cross-dumping and establishing a fair upliftment mechanism to ensure a level playing field for all OMCs. Experts emphasized the need for a balanced and competitive market environment to ensure sustainable growth and consumer welfare. They stress that the government must support emerging players and ensure thorough due diligence and proper working conditions before adopting any deregulation policy.

Copyright Business Recorder, 2024