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Oil companies urge govt to border ‘judicious’ coverage

by Pakistan Latest News Update

ISLAMABAD: Oil advertising and marketing corporations (OMCs) have requested the federal government to offer a deregulated and honest surroundings to all arms of the petroleum sector by means of an all-encompassing petroleum coverage 2021 to deal with current challenges like repeated shortages, scale back overseas change loss by means of rationalised imports and supply funding alternatives to all as a substitute of engaged on simply refining coverage in isolation.

“It must be realised that oil marketing, storage, transportation and refining are four wheels of the same vehicle that must work in tandem to ensure petroleum supplies to the Pakistani consumer as well as to the armed forces. An impact on any one of them has a direct impact on the other three,” stated the Oil Advertising Affiliation of Pakistan (OMAP).

In a letter to chairman of the Cupboard Committee on Power (CCoE) and Minister for Planning and Growth Asad Umar, OMAP Chief Govt Officer Dr Ilyas Fazil identified that since a draft refinery coverage at the moment pending CCoE’s approval would additionally influence the oil advertising and marketing, storage and transportation sectors, it was needed that each one the 4 stakeholders be consulted for a coverage revision as a substitute of simply refineries.

Advisory council complains current coverage ignores downstream oil sector

Dr Fazil, who’s a former member of the Oil and Gasoline Regulatory Authority and headed the Oil Corporations Advisory Council (OCAC) for years, stated the downstream oil sector was outlined beneath Pakistan Oil (Refining, Mixing, Transportation, Storage and Advertising) Guidelines 2016, amended in 2018, and but the federal government seemed to be centered on the refining sector when it got here to revision in downstream petroleum coverage.

“The major chunk of the downstream sector is being totally ignored and is still subjected to the outdated 1997 Petroleum Policy,” stated the OMAP, a consultant physique of a lot of OMCs. It added that within the ensuing decade and a half, the downstream sector had undergone a sea change in its dynamics.

Whereas in 1997 there have been 5 refineries and are nonetheless 5, the story of oil advertising and marketing is an actual eye-opener because the variety of OMCs elevated from three to 66 at current, together with 35 OMCs with licences to market oil merchandise and 31 others in numerous levels of licensing.

Additionally, Pakistan at the moment imported 70 per cent of its petrol wants and 50laptop of excessive pace diesel (HSD) requirement and the stability is catered for by 5 refineries. Final 12 months, Pakistan imported round 8.1 million tonnes of refined petroleum merchandise along with 6.8m tonnes of crude oil and spent $6.7 billion throughout July-March 2021 on oil imports as reported by the central financial institution.

The OMAP argued that half of overseas change went for refined merchandise that are imported by OMCs whereas petroleum oil liquids (POL) provide chain began from the imports at ports, the storage at ports, the pipeline transportation community at ports, the cross-country white oil pipeline (WOP) from Karachi to Mahmoodkot and Mahmoodkot-Faisalabad-Machhike, the oil storage installations, and depots and stores of OMCs.

“In terms of sheer volume of investment as well as tonnage, the oil marketing sector (storage, transportation and retail) far outweighs that of the refining sector,” wrote Dr Fazil.

He stated the refineries had an vital function to make sure steady manufacturing at oil and fuel wells at dwelling however it was the remaining segments of the downstream sector that had been extra if not equally accountable for addressing the challenges the nation confronted. For instance, the product high quality in Pakistan had improved from 87 Ron (non-Euro normal) to Euro-V normal now for which the OMCs performed the important thing function, however some refineries are nonetheless struggling to match the nation’s specification.

The OMAP chief knowledgeable the CCOE chairman that spearheaded by the planning and growth ministry, a draft downstream petroleum coverage was finalised in 2017 with all stakeholders on board. The draft focused non-public sector funding and addressed the short-, medium- and long-term actions wanted to beat the challenges with timelines.

It supplied a street map to make use of fullest use of the prevailing property, strengthening the regulatory framework to make sure the emergence of a very aggressive market construction whereas offering traders with larger authorized certainty and extra regulatory oversight and arbitration and envisaged clear timelines for deregulation and product specification enhancements. Nonetheless, unusually the main target has now shifted in direction of refining alone.

The OMAP demanded a phased strategy as achieved globally to permit a minimal wanted time to the refineries and OMCs to calibrate their methods to maneuver to the subsequent stage from the present one. There needs to be coverage pointers and framework to be in place for vitality combine on a long-term horizon to allow strategic capital funding for acceptable vitality sourcing.

“Till deregulation, revision of OMC’s margins should be done annually and automatically based on inflation and there should be no ban on retail outlet development,” the OMAP stated, including {that a} level-playing subject needs to be accessible to all gamers and established gamers shouldn’t be penalised with totally different yardsticks for retail or storage growth parameters. It demanded an anti-adulteration regulation for strict high quality management and that the coverage framework needs to be constant and ratified by parliament for 15 years.

Printed in Daybreak, August 23rd, 2021

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