Staff Report
ISLAMABAD:
The Oil Companies Advisory Council (OCAC) has raised concerns over restrictive pricing of motor fuels, and asked the Minister of State for Petroleum to immediately revise the prices and call an urgent meeting with industry members to develop a mechanism for recovery of exchange losses.
OCAC, in a letter to Minister of State for Petroleum, Dr Musadik Malik, has highlighted that the continued control of oil prices since the past year is not sustainable and will severely impact the already crippled oil industry. It said that the industry is facing severe financial crunch due to high global prices, depreciation of rupee, increased Letter of Credit (LC) conformation charges, challenges in LC establishment and retirement, high markup rates, high premium om imports etc. and will not be able to survive if these unfair adjustments are not removed immediately.
“In order to ensure survival of the industry and avoid any supply chain challenges, we request immediate revision of prices based on the GoP approved pricing formula and an urgent meeting with industry members to develop a mechanism for recovery of Exchange Losses,” said the OCAC letter.
It is pertinent to mention that the agriculture season is expected to start in the second week not March 2023, the industry will not be able to meet the increased demand placed on industry, if the current restrictive pricing is continued further, the letter added.
According to OCAC, exchange loss adjustments was reduced by Rs 22.72 & Rs 74.91 per litre on MS and HSD respectively. Similarly, custom duty was reduced by Rs 4.24 and Rs 3.64 per litre on MS & HSD respectively on verbal instructions by OGRA. Furthermore, long pending margins of Oil Marketing Companies (OMCs) on motor fuels was approved by ECC on October 31, 2022, however, a revised margin of Rs 6 per litre has not been fully incorporated in HSD price till date (Rs 2 per litre outstanding).
Based on the expected sale volumes for second fortnight of February, as confirmed in the Product Review meeting chaired by Oil and Gas Regulatory Authority, the impact of the ‘unjustified adjustment, impact of exchange loss on Motor Spirit (MS) and High Speed Diesel (HSD) currently stands at Rs 32,642.325, while impact of custom duty on MS and HSD is Rs 2,933.642, impact of margin on the two (MS & HSD) is Rs 305,431 and impact of margin on both is Rs 35,881,398 which in total is Rs 35,881,398, said the OCAC letter.
OCAC also said prices of motor fuels have been restricted, yet again, for the second fortnight of February 2023 by the government by not following the GoP approved pricing formula.
