Refineries criticize Ogra for allowing HSD imports

Tanveer Malik
Friday, Jun 14, 2024

KARACHI: The refining sector has criticized the Oil & Gas Regulatory Authority (Ogra) for allowing the import of 15,000 tonnes of high-speed diesel (HSD) despite the availability of local HSD stocks.

In a letter to Chairperson of Ogra Mansoor Khan, the country’s five refineries said that the regulator was informed in May about the concerns of the refineries regarding challenges in product off-takes, directly resulting from the failure of OMCs to uplift the committed quantities of HSD and MOGAS especially during the last two months.

All the re neries had requested Ogra to direct “OMCs to uplift the committed quantities of POL products from re neries -- essential for the smooth operation of refineries -- and import only the actual de cit volumes. It was in this context that Gas & Oil Pakistan Ltd’s (GO) request for the import of 15,000 metric tonnes of HSD during June 2024 was opposed by all re neries due to the availability of excessive HSD stocks with re neries.”

The notice added that “Ogra in total disregard to the decision taken during the product review meeting allowed GO to import 15,000 tonnes of HSD on the pretext of stock building/sales during June 2024.

The refineries added that this action was disappointing and that “the re neries which are already struggling with the free ow of smuggled products while simultaneously managing huge inventories of HSD have once again been punished with unabated imports in the country.”

Ogra would have been well within its right to have allowed imports in the country to any OMC had the re neries not willing to cater to their needs. And yet Ogra preferred imports over local availability disregarding the decision taken earlier, the refineries stated.

They also disagreed with Ogra’s June 4 letter in response the re neries’ May 23 letter offering competitive commercial terms to OMCs so that they reap the bene t of Rule 35(g) of the Pakistan Oil (Re ning, Blending, Transportation, Storage, and Marketing) Rules 2016.

Per the refineries: “linking the enforceability of Rule 35(g) to any commercial arrangement as envisaged by Ogra gives a blanket approval for imports to any OMCs at the cost of the country’s precious foreign exchange, thus compromising on country’s energy security.

They noted that “it is essential to ensure the upliftment of local re neries’ products before allowing any imports.” Keeping in view the volatile market conditions and the available MOGAS/HSD stocks with the re neries, the refineries, in the letter, requested Ogra to revisit its decision for allowing the imports of HSD and direct OMCs, including GO, to rst ensure the upliftment of their committed quantities from re neries before seeking import permission.

According to them, since Ogra is the regulator, it should also ensure that all OMCs are maintaining their mandatory 20-day stock cover through local uplifting. “We reiterate that this is crucial for the sustainable operation of re neries, and MOGAS and HSD imports should only be allowed to the extent of actual de cit quantities.”