ISLAMABAD: Ahead of a substantial price hike, the Pakistan Petroleum Dealers Association (PPDA) on Thursday accused major oil marketing companies (OMCs) of creating an artificial shortage of petroleum products to earn windfall inventory gains and appealed to the government and the Oil and Gas Regulatory Authority (Ogra) for urgent intervention in the situation.

Oil industry officials said the price hike in petrol and high-speed diesel was going higher than anticipated earlier as prices in the Middle East market had increased further on Wednesday and Tuesday.

Based on the latest market data, the price of petrol was estimated to be higher by more than Rs9 and that of HSD by over Rs11 per litre. However, the hikes would be Rs14 and Rs16, respectively, if the government increases the petroleum levy by Rs5 per litre from July 1.

Because of this large gap between the existing stocks and future prices, all market players try to have windfalls. In an official statement, the PPDA said it was “agitating against the hoarding of fuel supply by all oil marketing companies operating in Pakistan, including Pakistan State Oil, Shell Pakistan Limited, Total Parco Pakistan Ltd, and Attock Petroleum Limited, among others”.

“Whenever there is an expected price rise in fuel prices, these companies hoard fuel supply, causing artificial shortages and undue hardship to petroleum dealers and the general public,” PPDA spokesperson Hassan Shah said.

He said that despite clear orders and 100 per cent payments made in advance, these companies were not releasing fuel stock, citing excuses like “capping” or offering only average fuel, stoking instability in the petroleum product market.

He said this is a clear violation of rules and regulations, and we demand immediate intervention from the relevant authorities like Ogra and the Competition Commission of Pakistan.

A representative of the OMCs said the dealers were not as enthusiastic in the procurement of petroleum products in such quantities when prices were going down over the past two months or so in view of inventory losses that OMCs suffered and were now trying to recoup as prices go up.

The oil marketing companies, he said, were more or less maintaining similar release patterns now. He said the inventory losses and gains were part of the oil business and no stakeholder could pick and choose to have the best of both worlds.

The PPDA statement said it had requested the Ogra chairman to intervene in the matter and direct oil marketing companies to release fuel stock to petroleum dealers. “Petroleum dealers are also meeting the Senate chairman on Friday (June 28) to apprise him about the issue so that he can direct the Ministry of Petroleum and Ogra to hold inquiries into the matter at the highest level,” Mr Shah said.

As soon as the news of a likely oil price hike is aired on TV channels, the customers swarm to filling stations to buy fuel. Many petrol pumps cannot satisfy the needs of the public owing to low inventories, which results in complications, he complained.

Ogra teams should check to see if the fuel order has been placed and payment has been made before fining petrol pumps for not supplying fuel to consumers.

If the filling stations did not get oil despite paying in advance, oil marketing companies should be penalised for suspending fuel supply, and the petroleum dealers should be spared, he demanded.

He said that Ogra should mobilise its enforcement team to ensure that all the OMCs keep their retail outlets wet and well-supplied with petroleum products.

He demanded that any attempt at hoarding must be strongly discouraged by the authorities to avoid panic, and actions may be taken against OMCs that maintain stocks lower than the mandatory requirement.

“We will not tolerate this exploitation of petroleum dealers and the public,” Mr Shah of PPDA said, adding that the association demand a fair and transparent system and will take all necessary steps to meet its justified demands.

Published in Dawn, June 28th, 2024