ISLAMABAD: As petrol stocks plummeted to three-five days’ consumption cover throughout the country, except Sindh, the government increased its price by Rs1.71 per litre and decided to change berthing order of various oil vessels.

A senior government official told Dawn that the country’s overall petrol stocks had fallen below 260,000 tonnes that were equivalent to less than 10 days of consumption. After excluding Sindh where petrol stocks are enough for about 30 days, the product’s availability in Punjab and Khyber Pakhtunkhwa is for less than five days and in Balochistan and northern areas for three days.

Higher consumption, high tide at the sea and poor planning and stock management were termed key reasons for the shortage.

Government decides to change berthing order of various oil vessels; OMCs seek removal of tax anomalies

To cope with the situation, the Petroleum Division on Friday requested the Ministry of Maritime Affairs to prioritise berthing of vessels carrying motor gasoline (petrol). “Keeping in view the critical demand/supply position of petroleum products, it is requested that sequence for berthing” of petrol be prioritised at Karachi Port Trust and Fauji Oil Terminal Company between July 31 and Aug 3, it said.

During this period, five ships carrying a total of 210,000 tonnes of petrol will be berthed at the two terminals — two ships belonging to Pakistan State Oil (PSO) and the remaining to Total Parco, Go and Shell Pakistan.

Sources said some disruptions were also caused by the delay in arrival of crude vessel of Byco Petroleum due to high tide and exhaustion of the product in its storage. A vessel belonging to Shell also faced delays due to high tide. Some supply problems were because of Hascol that is currently facing financial difficulties.

A recent drop in supplies from Iran through smuggling and security issues were also a reason behind lower stocks in Balochistan, the sources said. On top of that, the budgeting cost of refineries had increased because of upfront payment of GST following the recent federal budget.

The sources said that PSO being the largest supplier had reasonable supplies from Pakistan, Attock and to some extent Parco refineries, but smaller oil marketing companies (OMCs) were facing supply problems.

The sources said the government had been asking the refineries at monthly product review meetings (PRMs) to ensure supplies also to smaller companies, but practically such directives could not be implemented. The refineries contend they had long-term supply contracts with major oil marketing companies.

The berthing schedules of various vessels of different products were also disturbed by elimination of the role of the Oil Companies Advisory Council (OCAC) from the birthing priorities that affected the system. The resultant divided responsibility between the directorate general of oil and the Oil and Gas Regulatory Authority (Ogra) in the PRMs has so far not been helpful. As a result, such issues then reach the petroleum secretary’s office for coordination with the maritime affairs ministry with a time lag.

Petroleum products’ prices

Special Assistant to the Prime Minister on Political Affairs Shahbaz Gill announced through his Twitter account that the price of petrol was being increased by Rs1.71 per litre on the advice of Ogra, while that of diesel was being kept unchanged because it affected the common and farmers.

Interestingly, Ogra had worked out a reduction of Rs2.27 per litre in the price of high speed diesel but at the request of the Finance Division, the reduction was absorbed against an equivalent increase in petroleum levy.

The ex-depot price of petrol was increased by 1.5 per cent to Rs119.80 from Rs118.09 per litre. The price of kerosene was raised by 35 paisa to Rs87.49 per litre. The prices of high speed diesel (HSD) and light diesel oil (LDO) were kept unchanged at Rs116.53 and Rs84.67 per litre, respectively, according to Mr Gill’s tweet.

On the other hand, the Oil Marketing Association Pakistan (OMAP), a representative body of oil marketing companies, on Friday asked the government to remove the anomaly in the levying of turnover tax applicable to the oil marketing sector by linking it to margins earned by oil marketing companies and reducing its rate to 0.25pc.

OMAP Chief Executive Officer Dr Ilyas Fazil, in a letter to Finance Minister Shaukat Tarin, said: “The rate of turnover tax (currently at 0.75pc) should be rationalised/aligned to remove all elements of discrimination and be reduced to 0.25pc in order to provide much-needed relief to cash flows and profits. Minimum tax should, moreover, be linked to the gross margins for OMCs rather than the revenues as OMCs have a very thin government-regulated margin.”

Read: OMCs seek an end to ongoing ‘witch-hunt’

He argued that the rate of 0.75pc has been fixed for OMCs without taking into account average profit to turnover ratio in the relevant sector, which is lower than many other industries for which turnover tax rate has been fixed at 0.25pc as it was levied on rice mills and distributors of pharmaceutical industries, the prices of whose products were controlled by the government like the OMCs that should be given a similar treatment for being a highly regulated sector.

Besides, he said, the dealers, sub-dealers, retailers and wholesalers of fast-moving consumer goods, sugar, cement and edible oil have been allowed discounted rate of 0.25pc under Clause (24D) of Part II of the Second Schedule to the Income Tax Ordinance, 2001, like OMCs.

Published in Dawn, July 31st, 2021