ISLAMABAD-To evolve a mechanism for exchange rate adjustment, Oil and Gas Regulatory Authority (OGRA) has asked the industry to align its procurement mechanism with Federal government prevailing policy and advised the Oil Marketing Companies (OMCs) to submit working of their exchange rate adjustment for the imports during the last six months.
Since the exchange rate adjustment mechanism is linked with PSO payment cycle, therefore, in order to avoid any potential loss, the industry must align its procurement mechanism with Federal government prevailing policy, said the letter written by OGRA to OMCs on mechanism of exchange rate adjustment. This is with reference to the meeting dated 21st March 2023 to discuss the mechanism of exchange rate adjustment, attended by representatives of MOEPD, OCAC, OMAP, CEOs, CFOs of OMCs, the letter said.
In this connection, OGRA had given a brief presentation on the matter, and had explained to the Federal government/ ECC of the Cabinet Division policy on the above subject. The relevant part of the policy is stated below for ready references: Exchange rate to be used as provisionally available for PSO but to be converted to actual upon retirement of LC (not later than 60 days from BL date), any adjustment to be made as prior period adjustment as per present practice, already approved by ECC vide its decision date 09.4.2020, said the letter. Other cost components (C&F price of PSO Incidentals Custom Duty) mentioned above may also be adjusted on actual basis in next fortnight.
Accordingly, in order to manage the forex exchange impact on import of POL products by the industry, the following was advised by OGRA and MOEPD:— Since the exchange rate adjustment mechanism is linked with PSO payment cycle, therefore, in order to avoid any potential loss, the industry must align its procurement mechanism with Federal government prevailing policy. It was also advised that the OMCs’ import price (C&F) should also be competitive with the Bench-Mark Platts, since the FG policy has benchmarked its price with Arab-Gulf Platts daily average for the number of days in pricing period. In order to critically review the matter on your request, you are hereby advised to submit working of your exchange rate adjustment for the imports during the last six months within two weeks, positively. The working shall include but not limited to following: Import cost recoverable under exchange rate mechanism as per Federal government policy and unrecovered import cost due to being over and above the benchmarked parameters of the Federal government policy.