Staff Report
ISLAMABAD:
The Oil and Gas Regulatory Authority (OGRA) has briefed the Oil Marketing Companies (OMCs) about the mechanism of exchange rate adjustment and explained the federal government policy in this regard.
Sources in petroleum division informed that OGRA had convened a meeting on 21st March 2023 to discuss the mechanism of exchange rate adjustment with the representatives of Petroleum division, Oil Companies Advisory Council (OCAC), Oil Marketing Association of Pakistan (OMAP) and Chief Executive Officers (CEOs)/Chief Financial Officers (CFOs) of 34 OMCs. And, in this connection, OGRA gave a brief presentation on the matter and explained the Federal Government/Economic Coordination Committee (ECC) of the Cabinet Division policy.
According to the government policy, exchange rate to be used as provisionally available for PSO (Pakistan State Oil) but to be converted to actual upon retirement of Letters of Credit (LC )(not later than 60 days from Bill of Lading Date), any adjustment to be made as prior period adjustment as per present practice, already approved by ECC vide its decision date 09.4.2020. Other cost components (C& price of PSO, Incidentals, Custom Duty) mentioned above may also be adjusted on actual basis in next fortnight.
Accordingly, in order to manage the forex exchange impact on import of POL products by the industry, the following was advised by OGRA and MOEPD (Ministry of Energy (Petroleum Division):
a) Since, the exchange rate adjustment mechanism is linked with PSO payment cycle. Therefore, in order to avoid any potential loss, the
industry must align its procurement mechanism with Federal Government prevailing policy.
b) It was also advised that the OMCs’ import price (C&F) should also be competitive with the Bench-Mark Platts, since the FG policy has
benchmarked its price with Arab-Gulf Platts daily average for the number of days in pricing period.
In order to critically review the matter, OGRA advised the OMCs to submit working of their exchange rate adjustment for the imports during the last six months within two weeks, positively. The working shall include but not limited to following:
a) Import cost recoverable under exchange rate mechanism as per Federal Government policy.
b) Unrecovered import cost due to being over and above the benchmarked parameters of the Federal Government policy.
