ISLAMABAD: The Oil Companies Advisory Council (OCAC) has leveled accusations against the Pakistan regulatory body, claiming that the recent forced reduction and manipulation of high-speed diesel (HSD) prices has resulted in an inventory loss of Rs11 billion for the industry.
The OCAC warned that uninterrupted fuel supply cannot be guaranteed under the current circumstances.
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In a letter addressed to the chairman of the Oil and Gas Regulatory Authority (OGRA), the OCAC chairman alleged that the government reduced the price of HSD by Rs7 per litre for the second fortnight of July 2023, despite the fact that the price was supposed to increase based on a formula approved by the Economic Coordination Committee (ECC) on July 28, 2020.
The letter claimed that instead of passing on the price increase or offsetting its impact by reducing the petroleum levy (PL), the government unilaterally and unjustly reduced the price by applying an inaccurate premium.
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The oil industry argues that, according to the government-approved mechanism, if Pakistan State Oil (PSO) does not import any HSD during a particular fortnight, the premium and other incidentals from the previous fortnight should be applied. This policy was implemented to ensure accurate recovery for inventory acquired at the rates prevailing in the previous fortnight.
Since PSO did not import any HSD during the first fortnight of July 2023, the previous premium of $11.50 per barrel (BBL) should have been used for price computation in the second fortnight. However, OGRA used a premium of $4.20 per BBL, which the industry considers an arbitrary revision and contrary to the essence of the ECC decision.
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The OCAC letter further states that, apart from the premium, other incidentals included in the price were from the previous period (second fortnight of June 2023), indicating that the applied premium is anomalous.
According to OCAC calculations, there is a shortfall of $7.30 per BBL, considering an exchange rate of Rs278 against the US dollar. The shortfall in premium, in Pakistani rupees, amounts to Rs2,033.05 per BBL, resulting in an impact on the price of Rs12.79 per litre.
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