Refineries urge Ogra to ensure timely uplift of POL products

ISLAMABAD: All local refineries have urged the Oil and Gas Regulatory Authority (Ogra) to ensure that oil marketing companies (OMCs) timely uplift local petroleum products for a smooth supply chain before allowing POL imports.

This has been asked in a letter to the Ogra chairman, referring to a meeting held in Karachi on March 3. It has been signed by the chief executives officers and managing directors of Attock Refinery Limited (ARL), National Refinery Limited (NRL), Pakistan Refinery Limited (PRL), and Pak-Arab Refinery Limited Company (PARCO).

It said that during the meeting, all the refineries raised their serious concerns about insufficient product off-takes resulting from the failure of OMCs to uplift the committed quantities of HSD & MOGAS as agreed during the periodic Product Review (PR) meetings, and requested Ogra’s intervention which was duly acknowledged by the authority.

The refineries believe the explanation provided in Ogra’s letter with respect to determination of insufficiency in local production before approving imports is “misconceived and misleading”.

They instead argued that as clearly stipulated under Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016 (OGRA Rules), an OMC is required to give an undertaking to Ogra that it shall first uplift local product before opting for imports. This is the premise on which OMCs are granted their licenses.

They said: “The enforcement of such compliance rests with Ogra, which is equally empowered to take action against any defaulting OMC under Rule 69 of Ogra Rules 2016.”

“Moreover, it is Ogra’s responsibility to protect the public interest. Allowing imports when the local production is not being uplifted at the expense of country’s precious foreign exchange and consumer price (resulting from higher IFEM) undermines the spirit of Ogra’s statute and regulatory framework. The letter also mentions that all the refineries already have contractual/commercial agreements with OMCs for supply of products.

The refineries also said that it is essential for Ogra to ensure that refineries’ product upliftment is prioritised before allowing OMCs any deficit imports, in line with Rule 35(g). Moreover, it is Ogra’s responsibility to ensure that only such OMCs commence operations which have a valid license and contractual/commercial arrangements with local refineries.

However, refineries appreciated in the letter, Ogra’s initiative in their supply agreements with OMCs to incorporate a “Take or pay” clause to address uplifting issues. However, as already explained, the refineries already have binding contracts with OMC and in any event, such changes can only be incorporated if they are mutually agreed upon by all stakeholders, with a clear implementation mechanism, and the enforcement of the overall supply chain arrangement is monitored and ensured by Ogra.