Refineries, OMCs to face penalties for breaching PRM decisions

ISLAMABAD: In a bid to maintain the fuel supply chain intact and ensure energy security, the Oil and Gas Regulatory Authority (Ogra) has carved out a new mechanism under which any party -- whether refineries or Oil Marketing Companies (OMCs) -- involved in disputes over the import of POL products, less uplifting of local petroleum products, or short local production in violation of decisions made in the monthly Product Review Meeting (PRM) will face penalties and suspension of their licenses.

At last, the regulator issued a strict warning to refineries and OMCs stating that if they failed to accomplish commitments of producing POL products and lifting local products as per the PRM they would not only be punished through a monetary penalty but their licenses would also be suspended.

This warning has been conveyed by Ogra on May 30 to the Chief Executive Officers (CEOs) of refineries and over three dozen OMCs, calling for strict compliance with commitments made to the oil sector regulator.

According to Ogra, the issue of non-compliance by OMCs in uplifting locally produced fuel and failure by refineries to meet production targets was discussed on May 29 in detail during the recent PRM. The authority observed that numerous OMCs did not honour their commitments to procure product from local refineries, as agreed in the PRM.

In the meeting held on May 29, the OMCs which in March failed to maintain 20 days stock cover of MS & HSD in compliance of Rule 37 of the Pakistan Oil Rules 2016 will be penalised with a penalty of Rs10 million if they have less than 5 days stock of petrol and HSD. If the OMCs have a stock of POL products with less than 10 days cover but more than 5 days will face a penalty of Rs7.5 million. And those OMCs that have a stock of POL products less than 15 days cover and more than 10 days needs, will face the punishment of Rs5 million and those having a stock of less than 20 days cover and more than 15 days cover will be exposed to a penalty of Rs1 million.

However, OMCs that have uplifted insufficient products from refineries, the refineries that have not supplied the products to an OMC as per their allocation, and the refineries that have produced products less than the commitment in the PRM during the month of March-2025 shall be penalised, owing to violation of decisions taken in relative PRM meeting as per the new formula.

Under the formula, the OMCs involved in short upliftment of local products by less than 25 percent would face a penalty of Rs1 million and those which will be involved in procuring local POL products less than 50 percent and more than 25 percent will pay Rs5 million as penalty.

However, those OMCs involved in less lifting of products more than 50 percent and 75 percent will face a penalty of Rs7.5 million and Rs10 million respectively and the same treatment will be meted out to the refineries if any of them found involved in less production of POL products in breach of PRM decisions.

“This failure to comply with PRM directives is not only disrupting Ogra’s oil supply chain management but also undermining national energy security and leading to significant revenue losses due to unnecessary imports, which constitutes a violation of the authority’s directives,” Ogra stated.