OGRA approves oil transportation tariffs for MFM and KMK pipelines

ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) has approved the tariffs for Mahmoodkot-Faisalabad-Machike (MFM) pipeline and Karachi-Mahmoodkot (KMK) pipeline for oil transportation and advised the Oil Companies Advisory Council (OCAC) to implement the tariff decision.

OGRA, in a letter dated 17th August 2021, has advised the Oil Companies Advisory Council (OCAC) to implement the decision taken by the authority (OGRA) in its regulatory meeting No. 11 of 2021 held on August 10, 2021.

The Authority is pleased to grant the approval of PARCO’s Mahmoodkot-Faisalabad-Machike (MFM) pipeline tariff for motor gasoline transportation and has revised the transportation tariff of KMK pipeline (crude oil), said the OGRA decision.

As per details, the federal cabinet’s economic coordination committee (ECC) had earlier taken a decision that explicitly guided implementation of Mogas pipeline tariff @ of 85 per cent of prevailing railway tariff. OGRA has now approved to implement this ECC decision.

According to OGRA’s decision, gasoline transportation from Mahmoodkot to Faisalabad is fixed at PKR 1,832/MT and PKR 2,227/MT for Mahmoodkot to Machike.

Similarly, following ECC directions regarding revision in tariff for KMK for crude oil transportation in line with the provision of OGRA Ordinance 2002, OGRA has also approved to implement of the crude oil tariff for KMK @ Rs 3, 681/m tonne based on the current railways tariff of Rs 5,610 per Metric Ton for the section Karachi to Mahmoodkot.

Furthermore, in the case of the MFM HSD pipeline, OGRA has said that since the interpretation of “suitability of full increase” in the policy guidelines, as advised by the federal government, needs further clarity to avoid any ambiguity in the implementation of the said ECC decision, therefore the Authority has decided that Ministry of Energy (Petroleum Division) may be requested to provide a clear guideline in the matter as has been approved in case of Mogas MFM pipeline transportation tariff.

It is relevant to note that OGRA has directed the OCAC to implement the decision taken by ECC being a policy guideline as per OGRA Ordinance 2002. The ECC had explicitly provided guidance for implementation of Mogas pipeline tariff @ 85pc of prevailing railway tariff.

According to sources, oil transportation through a pipeline is expected to start during next month of September 2021 and the commissioning of this pipeline in result will benefit the nation and national exchequer by protecting the environment, providing relief to oil consumers in the form of a reduction in oil prices and decreasing burden of lorries, tankers on roads.

PARCO commissioned 362km Mahmoodkot- Faisalabad–Machhike (MFM) Pipeline, in 1997 to transport refined products like diesel and kerosene to Faisalabad and Machhike near Lahore. MFM has designed a pumping capacity of approximately 3.7 million tons per year.

The 870km Karachi-Mahmoodkot (KMK) Pipeline, commissioned in 1981, transports crude from Karachi to Mahmoodkot near Multan for its Mid Country Refinery. Its initial annual pumping capacity of 2.9m tonnes has been upgraded and KMK is now capable of pumping up to 6m tons per year.


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Ahmad Ahmadani
Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected].
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