OMAP concerned over pricing mechanism associated with PMG, HSD sectors in Pakistan

LAHORE-The Oil Marketing Association of Pakistan raised their concerns on the pricing mechanism associated with the PMG and HSD sectors in Pakistan.
OMAP Chairman Tariq Wazir Ali highlights a noticeable incongruity between the premiums extended to the Pakistan State Oil (PSO) and those provided to other Oil Marketing Companies (OMCs) to chairman Oil and Gas Regulatory Authority. The focal point of this concern revolves around the contrast in premiums allotted to PSO as opposed to those allocated to other industry participants.
The purpose of writing this letter is to bring chairman OGRA’s attention towards the issue that the scope of PSO’s cargo volumes surpasses those imported by its OMC counterparts, attributable to its substantial market share. As a result of this scale, PSO has been able to secure lower premiums in comparison to what is extended to other OMCs. According to the letter, the industry has been at a disadvantage for HSD due to the G2G agreement resulting in loss of billions of rupee. Similarly, for Mogas analysis of the situation reveals that an OMC with an average cargo size experienced a net loss of $2.30 per barrel over the last eight months of 2023, when juxtaposed with the premium secured by PSO. This translates to a substantial loss of Rs4.27 per litre, a staggering 71 percent of the prevailing OMC margin.
Despite numerous correspondences submitted by various OMCs advocating for enhanced transparency in the exchange rate adjustment mechanism, regrettably, we find ourselves still devoid of clarity in this matter. The letter also pointed out the intricacies of PSO’s computation of exchange rate adjustments integrated into pricing elude our comprehension. OMAP urges OGRA to facilitate a heightened level of transparency by elucidating the comprehensive methodology behind this process. Such elucidation would empower OMCs to effectively navigate these dynamics autonomously. OMAP also requests chairman OGRA to evolve a reimbursement mechanism for premiums, akin to the established practice in the case of HSD premiums.

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