Ogra allows import of 15,000 metric tons of high-speed diesel despite strong opposition of local refineries

Local refineries are producing sufficient amounts and have expressed strong  objections to move, which in turn will  lead to closure of country’s refineries.

ISLAMABAD   -   The Oil and Gas Regulatory Authority has made a decision to allow the import of 15,000 metric tons of high-speed diesel, despite the fact that local refineries are producing sufficient amounts and have expressed strong objections to the move, which in turn will lead to the closure of the country’s refineries.

“Local refineries are the backbone of heavy industrial development and are intrinsically connected to defense and energy security needs of the country. Any blind reliance on imported fuels will not only increase risk to the country’s energy supply chain but has the potential to result in disastrous consequences,” said a letter written by the chief executive officers/managing directors of five oil refineries to Masroor Khan, chairman of Oil and Gas Regulatory Authority. A letter of protest written by Pak-Arab Refinery Limited, Attock Refinery Limited, Pakistan Refinery Limited, National Refinery Limited and Cneergyin Pak Limited said that the refineries had raised their concerns, with the regulator, regarding challenges in product off-takes, directly resulting from the failure of OMCs to uplift the committed quantities of HSD and MOGAS especially during past two months. In this regard, all the refineries had requested the chairman Ogra to direct OMCs to uplift the committed quantities of POL product from refineries being essential for the smooth refineries’ operations, and only the actual deficit volumes to be imported, the letter said the letter available with The Nation.

It was in this context that M/s. Gas & Oil Pakistan’s (GO) request for the import of 15,000 MT of HSD during June 2024 was opposed by all refineries in view of availability of excessive HSD stocks with refineries, and was not allowed as is also evident from the import plan of HSD finalized and shared through Product Review Minutes issued by OGRA in June 11, 2024. Contrary to the above, it has come to our notice that OGRA in total disregard to the decision taken during the Product Review Meeting dated June 12, 2024 in response to GO request dated June 10, 2024 has allowed GO to import 15,000 tons of HSD on the pretext of stock building/sales during month of June 2024, which is most disappointing. The fact remains the refineries which are already struggling from the free flow of smuggled product, and also carrying huge inventories of HSD have once again been punished with unabated imports in the country.

Instead of uplifting the HSD from the local refineries without any valid reason, GO preferred to import the product, the letter said. OGRA would have been well within its right to have allowed imports in the country to any OMC had the refineries not willing to cater to the needs of GO or any other OMC, the communication underlined. Yet imports over local availability were preferred by OGRA in spite of the decision taken earlier. We also disagree with OGRA’s letter dated June 04, 2024 in response to Joint Refineries letter dated May 23, 2024 regarding offering competitive commercial terms to OMCs to be able to reap the benefit of Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016. Unfortunately, linking the enforceability of Rule 35(g) to any commercial arrangement as envisaged by OGRA defeats the essence and purpose of the above Rule and gives a blanket approval for imports to any OMCs at the cost of country’s precious foreign exchange thus compromising on country’s energy security. It is therefore essential to ensure upliftment of local refineries product before allowing any MOGAS/HSD imports as clearly envisaged under Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016.

“Keeping in view the volatile market conditions, available stocks of MOGAS/HSD with the refineries, we would like to request OGRA to revisit its decision for allowing imports of HSD to M/s GO and direct the OMCs, including M/s GO, to first ensure upliftment of their required POL product committed quantities from refineries before seeking import permission. OGRA being the regulator should also ensure that all OMCs are maintaining their mandatory 20 days stock cover as per OGRA license conditions first through local uplifting.” “We reiterate that this is crucial for sustainable operation of refineries and MOGAS and HSD imports should only be allowed to the extent of actual deficit quantities,” said the letter.

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