The Oil and Gas Regulatory Authority (Ogra) is engaged in a dispute with a group of 13 oil marketing companies (OMCs) over storage capacity shortfalls and the expansion of retail networks, media sources have reported. The ban is imposed on PSO, Shell, Total-Parco, Attock, Hascol, Total-Parco Pakistan, Askar Oil, Byco, Overseas Oil, Bakri Trading, Gas and Oil, Zoom and Admore.
On January 12, Ogra barred the 13 OMCs from conducting expansion of retail outlet networks due to their inability to maintain appropriate storage capacity levels as per the government policy. It is mandatory for OMCs to ensure product-wise storage capacity in addition to maintaining stocks for a minimum of 20 days.Ogra’s directives were issued at the time when the historic supply chain disruption in January 2015 led to logistical problems nationwide leading to the removal of some 10  government and industry personnel.
Ogra’s directives were issued keeping in view that the historic supply chain disruption in January 2015 led to logistical problems nationwide leading to the removal of some 10  government and industry personnel.
A similar episode was encountered last week when the oil tankers association went on strike on the issue of taxation leading to fuel shortage in some parts of the country.
An official in the Ogra is reported to have said that the ban on expansion of retail network has not come suddenly but Ogra has been warning the OMCs to invest in storage infrastructure rather than concentrating on the growth of the retail network.
The Oil Companies Advisory Council (OCAC), a representative body of OMCs and refineries, termed the ban illegal and unfair stating that it would disrupt the supply chain further and prove counterproductive.It also argued against Ogra’s claim that stocks were inadequate to meet 20 days’ demand. Furthermore, OCAC stated that Ogra’s ban is ‘questionable’ as it did not cite any provision of law that grants it the power to exercise such authority.
Moreover, the ban on new outlets violates  Article 18 of the Constitution that allows every Pakistani individual to carry out lawful business.
Furthermore, OCAC claimed that every retail outlet maintains its own storage that must be accounted for when assessing the real days’ cover. By this rule, OMCs argue that their own storage as well as rented and lease storages at the ports, total in-transit stock (stocks on wheels) and storages at retail outlets must be incorporated when calculating the days’ cover. Accounting for this, the stocks are sufficient to cover more than 20 days.
It further added that volumes of fuel have seen steady growth over the last year, increasing demand that needs to be met through new sites. If retail expansion is banned, it will not only harm OMCs but also the consumers.
To add to that, the OCAC complained that OMCs were barred from building new storage capacities when the Ministry of Defence imposed a ban on new storages at Keamari and Machike with no approvals being granted for new storage tanks. As a result of this, no OMC can now invest in new storage capacity, and as per Ogra’s directives, no retail expansion can take place. This will only lead to more problems for the consumers who get refuelling of their vehicles at retail outlets and not depots.
