Petroleum dealers reject planned deregulation of prices

OGRA to set ToRs for deregulation of oil sector to promote competition as well as efficiency

ISLAMABAD: Petroleum dealers have rejected the proposed deregulation of prices of petroleum products, according to them Oil and Gas Regulatory Authority (OGRA) has so far not consulted them in this regard. 

The dealers during a Pakistan Petroleum Dealers Association (PPDA) ceremony held in Islamabad on Saturday rejected the proposed deregulation of prices for petroleum products.

In addition they declared that they would go on a countrywide strike if OGRA does not consult them before taking any final decision.

Former premier Shahid Khaqqan Abbasi in his address said that the government is all set to deregulate the prices of petroleum products because when the prices increase in the international oil market then the government has to jack up the prices and the masses have to bear the burden of hike in oil prices. He added that he is against the mechanism of petroleum price determination while the government has no link with the oil price determination. 

He said petroleum dealers should earn rightful profit from their businesses. However he was deplored that some dealers were allegedly involved in less measurement and adulteration of oil. If dealers are given rightful profit then they would avoid indulging in any illegal practice, said Shahid Khaqqan Abbasi.

This government has now approved due commission for dealers and it is hoped that they would earn rightful earnings from their businesses, Abbasi added.    

Speaking on the occasion, PPDA chairman Abdul Sami Khan said it is seriously ironic that OGRA has so far not consulted the dealers regarding the proposed deregulation of prices of petroleum products. 

PPDA chairman declared that the association does not accept proposed deregulation of prices of petroleum products and would prefer to go on countrywide strike if their demands are not met and they are not consulted before taking any final decision. We are the main stakeholder but we are being ignored by the OGRA, said Abdul Sami Khan.

He added that the government should immediately take measures to stop illegal smuggling of oil from Iran as the government is not earning revenue from the smuggling of oil while it is ruining petroleum dealers’ businesses.

We will strongly oppose the proposed deregulation of prices of petroleum products and would go on strike if not consulted, said Abdul Sami Khan.

PPDA office bearers from Punjab, Sindh, Balochistan, Khyber Pakhtunkhwa, Gilgit-Baltistan, Azad Jammu and Kashmir were present in the ceremony.

On Wednesday, the Oil and Gas Regulatory Authority (OGRA) conducted a meeting with Oil Marketing Companies (OMCs) on the planned deregulation of petroleum (POL) products following the government’s decision to deregulate the oil sector.

The meeting was presided by Chairman OGRA Masroor Khan, while member gas, member oil, member finance, senior executives from OGRA, Ministry of Energy (Petroleum Division), chief executive officers of OMCs, members of the Oil Companies Advisory Council (OCAC) and other industry players were in attendance.

It is relevant to note that the prices of petroleum products like petrol and High-Speed Diesel (HSD) are currently regulated while the price of furnace oil is deregulated. However, the government had earlier decided to give a free hand to the oil industry for setting petroleum product prices and asked OGRA to thrash out terms of references (ToRs) for the deregulation of the oil sector in order to promote competition and efficiency.

It is likely that the prices of POL products will be deregulated from November 1, 2022.

It is pertinent to mention that oil caters to 31% of Pakistan’s energy requirements. State-owned Pakistan State Oil (PSO) has been importing 50% of petroleum products whereas the other half is produced by local oil refineries. If the proposed deregulation of petroleum products goes ahead, PSO and local oil refineries will compete against each other.

It is also pertinent to mention that no refinery has been set up in Pakistan for over a decade. Similarly, upgradation of the existing refineries in accordance with latest technology has so far not been fully achieved.

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

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