ISLAMABAD: All five oil refineries have formally lodged protests with the government and the Oil & Gas Regulatory Authority (Ogra) for allowing the import of high-speed diesel (HSD).

The refiners said the move violated the decisions of the Product Review Meeting—a forum comprising the government, Ogra, and the oil industry—which required the procurement of products from local refineries before any imports.

In a joint letter to the Ogra chairman, minister, and secretary of the Petroleum Division, the five refineries—Attock, Parco, National, Pakistan Refinery, and Cynergico—said they had formally expressed concern regarding challenges in product off-takes, directly resulting from the failure of oil marketing companies (OMCs) to uplift the committed quantities of HSD and petrol, especially during the past two months.

They had also requested Ogra to direct OMCs to uplift the committed quantities of POL product from refineries, which are essential for smooth refineries’ operations, and only the actual deficit volumes to be imported.

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It was in this context that Gas & Oil Pakistan’s (GO) request for the import of 15,000 tonnes of HSD during June was opposed given the availability of excessive HSD stocks with refineries and “was not allowed as is also evident from the import plan of HSD finalised and shared through Product Review Minutes issued by Ogra” on June 11.

Contrary to this, “it has come to our notice that Ogra, in total disregard to the Product Review Meeting decision, has allowed GO to import 15,000 tonnes of HSD on the pretext of stock building/sales during the current month, which is most disappointing”, the letter said.

The chief executives of these refineries said they were already struggling with the free flow of smuggled products, and carrying huge inventories of HSD, which have once again been punished with unabated imports in the country. “Kindly appreciate that GO preferred to import HSD instead of uplifting the same from the local refineries without any valid reason”.

It said Ogra’s permission for import may have been valid had any of the refineries unwilling to cater to the needs of GO or any other OMC. “Yet imports over local availability were preferred by Ogra despite the decision taken earlier”.

The refineries also challenged Ogra’s view regarding offering competitive commercial terms to OMCs to be able to reap the benefit of Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation, Storage, and Marketing) Rules 2016. “Unfortunately, linking the enforceability of Rule 35(g) to any commercial arrangement as envisaged by Ogra defeats the essence and purpose of the said rule and gives a blanket approval for imports to any OMCs at the cost of country’s precious foreign exchange thus compromising on country’s energy security”.

The refineries claimed that it was essential to ensure upliftment of local refineries product before allowing any petrol or HSD imports as clearly envisaged under Rule 35(g) of Pakistan Oil (Refining, Blending, Transportation , Storage, and Marketing) Rules 2016.

The refineries demanded the Ogra to revisit its decision for allowing imports of HSD to GO and direct the OMCs, including GO, to first ensure upliftment of their required POL product committed quantities from refineries before seeking import permission keeping in view the volatile market conditions and available stocks of petrol and HSD with the Refineries.

An Ogra spokesperson said, “Local production of petrol and diesel is insufficient to cater for the local consumption. Therefore, OMCs are allowed to import both products in Pakistan. The import planning is primarily done in the product review meeting that happens one month before the planning month.”

Published in Dawn, June 16th, 2024