OGRA refutes OCAC claims about possible fuel shortage

ISLAMABAD: The oil industry has found itself in a hotly contested back and forth after the government rejected reports of a possible diesel shortage in the months ahead. 

Earlier, the Oil Companies Advisory Council (OCAC) had issued a letter reporting high sales of diesel and other fuels and warning that there would be product availability challenges in many regions. According to the letter, a number of Oil Management Companies (OMCs) experienced higher sales than they anticipated in October. The OCAC claims that as a result OMCs ended up using the oil reserves they had for the next month, essentially tying up the supply for November. 

The letter was strongly refuted the very next day (Tuesday), first by the Oil and Gas Regulatory Authority (OGRA) and then by the petroleum ministry. In its press release, the petroleum division claimed that the country’s petrol and diesel stocks were sufficient to meet demand. OGRA also came out swinging, claiming that media reports about a fuel shortage were “baseless and contrary to facts.” 

What is the conflict? 

Essentially, the OCAC, which is a private body that represents the interests of downstream oil, claimed in their letter that there had been an increase in demand for petroleum products in the month of October. They pinned this increase in demand to  the ongoing agricultural season when farmers need fuel to operate farm machinery, as well as escalating pace of infrastructure rehabilitation by the government in floods-stricken areas. 

The council warned that there would be availability challenges in various pockets of the country, and that imports were inadequate. Consequently they also asked the regulator, OGRA, to look into this matter and issue necessary directives to the importing OMCs for immediate procurement.

However, OGRA and the petroleum ministry clearly took exception to the claims, saying that the country’s fuel stocks were more than sufficient to meet demand. 

How much fuel do we have? 

In an update on Pakistan’s current fuel stocks, the petroleum ministry said that Pakistan’s petrol stocks currently stand at 550,000 Metric Tons which is sufficient for 21 days, while diesel stocks stand at 438,000 Metric Tons which is adequate for 15 days, based on Oil Companies Advisory Council’s (OCAC) own stock position.

With 22 days left in the month, the ministry added that Pakistan State Oil has imported 22,000 Metric Tons of diesel, of which one cargo ship is supposed to arrive at the Karachi port this Saturday. The ministry claimed that the cargos of the rest of the OMCs are also set to arrive in line to meet the country’s demand. However, no details were given of when these cargos are set to arrive, or about petrol imports. 

Essentially, the OCAC was unhappy about what they perceived as inadequate imports stemming from low availability in the international market and very high premiums. The international market has been volatile since February 2022 due to the impact caused by Russia and Ukraine conflict on oil prices & availability. Despite the challenges, the oil industry has been successfully striving to meet the fuel demand of the country backed by the local refineries and through import of deficit products. 

Amidst these alerts from the private sector, the government chose to deny these statements and emphasized that sufficient stocks were actually available. The country has an inventory of more than 400,000 MT HSD and 500,000 MT MS respectively. The OCAC also confirmed that imports of 250 KT HSD and 364 KT MS are finalized and the refineries are committed to supplying local fuel in line with their tabled production.

OGRA and the OCAC are supposed to review the sales trends of petroleum products together to ensure that their imports take place smoothly. The rift seems to have occurred despite regular consultative engagement sessions.

Oil and Gas Regulatory Authority (OGRA), OCAC and the oil Industry are reviewing the sales trend and closely monitoring it on a day to day basis through regular consultative engagement sessions to ensure that the fuel supplies remain streamlined for meeting the demand of the country, the OCAC added.

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

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