ARL on verge of shutdown due to continues slide in petrol, HSD

ISLAMABAD-Attock Refinery Limited (ARL) has lodged a complaint with caretaker petroleum minister against Oil and Gas Regulatory Authority (OGRA) for its failure to protect the interest of the local refinery against the import fuel, which has resulted in a decline of up to 43 percent in the refinery sale during the previous four months.
Attock Refinery Limited is on the verge of shutdown owing to continues slide in Petrol and High Speed Diesel (HSD) sale, which has declined by up to 43 percent during the previous four months, said a letter. The sale of petrol has declined by up to 43 percent while high speed diesel by 25.45 percent during last four months i.e. August to November, said two separate letters written by ARL to the caretaker Minister for Energy and Oil and Gas Regulatory Authority. According the petroleum sector experts, there are multiple reasons for the sale decline which includes the higher cost of locally procured crude oil which makes ARL refined product prices less competitive vis-à-vis imported refined products or products of the other refineries. Similarly, consumer’s perception for quality of the petroleum products and gauge of petrol pumps of various OMCs is another factor which affects the sale of the various OMCs and refineries. The sale of illegally procured petroleum products also plays a role in the decline of the overall sale of various refineries/OMCs.
In a letter addressed to caretaker Energy Minister Muhammad Ali, ARL said that the refinery processes 100 percent local indigenous crude oil from Khyber Pakhtunkhwa and Potohar regions. Due to falling output from these fields Attock Refinery Limited currently operates at 77-80 percent capacity. ARL has been requesting Petroleum Division, Ministry of Energy to allocate 5,000 barrels per day of condensate crude oil from fields in Sindh, which is currently being exported, but the proposal is yet to be implemented in spite of its approval by ECC six months ago, said the letter.
It is increasingly becoming difficult for ARL to operate even at lower throughput of 80 percent due to low upliftment of its products mainly petrol and diesel by Oil Marketing Companies (OMCs). The sales figures of last four months show that only 38 percent of petrol and 47 percent of diesel sold by OMCs in ARL’s sales envelope was uplifted from ARL and the rest was brought in from local or imported sources causing not only foreign exchange loss but also higher Inland Freight Equalisation Margins (IFEM) which is added up in consumers sales prices. The lower upliftment of products also frequently forces ARL to further reduce throughput or shutdown one or more of its plants. The situation has once again reached an alarming point where ARL will be forced to shut down if no corrective measures are taken.
Complaining regarding the role of OGRA, the letter said that as per Pakistan Oil Rules 2016, 35 (g) it is Oil and Gas Regulatory Authority (OGRA)’s responsibility to ensure that OMCs prioritise upliftment from local refineries over imports but in spite of a number of submissions and reminders, OGRA has failed to take any tangible corrective action. ARL has requested the minister intervention to enable ARL to operate at its optimum capacity. In a separate letter written to OGRA, ARL said that the sales data of the last four months indicates that product from other sources was moved by OMCs in ARL fed area thus impacting the country IFEM/consumers, and ARL product was not prioritised.
According the data shared by ARL with OGRA said that during the month of August off-take from ARL was 8.64 percent less than the offered quantity of 63,000 Metric Tonne, in September 20.48 percent less from 54,000 MT, in October 43 percent less than 69,000 MT, in November the off-take was 27.59 percent less than the offered quantity of 71,000 MT. The letter said that ARL was operating at lower throughput due to high stocks creating serious planning and operational issues. Even for the current month of December 2023, the uplifting situation is not encouraging and ARL would again be shutting down its units to manage high stocks of MS and HSD, the letter maintained.  

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