OCAC Blames Bureaucracy for Fuel Shortage

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Oil companies and refineries have blamed the bureaucracy for current petrol shortage in the country, saying the indecision regarding import as well as enhancing local petrol production led to the current situation.

Related: OGRA Penalizes 6 OMCs for Petroleum Shortages

The Oil Companies Advisory Council (OCAC) on Sunday said that a “disinformation campaign and maligning of refineries and oil marketing companies (OMCs)” was a matter of serious concern. It said:

“It is regretful that a lot of misinformation and blame game directed towards the Downstream Petroleum Sector has been observed particularly in the past two weeks which is unnecessary and counterproductive.”

The OCAC said there was an urgent need to review and analyze the inherent reasons for present shortages of petrol in the country which include import stoppage in March, directives by the energy ministry to lift the same restriction in April and delayed approvals for imports.

Related: Government Blame Mafias for Creating another Crisis

It claimed the ministry failed to determine the rise in demand as the COVID-19 lockdowns were being eased from May and there was tendency among consumers to move and drive around with exceptionally low oil prices, etc. According to OCAC:

“We would like to highlight that a typical supply chain of petroleum products ranges 45-60 days whereas an increase of 82% in June sales compared to April sales is significant, especially when there is heavy reliance on petrol imports which is associated with its various supply complexities such as securing appropriate quantities through International Suppliers/Traders, availability of bulk product carriers (ships) in marine freight market, port constraints, etc.”

It claimed that the Downstream Petroleum Sector continued to be a responsible corporate citizen of the country and needed to be treated with respect in view of its huge contribution to maintaining energy security in Pakistan. The OCAC added:

“An estimated figure of current replacement cost that is loss for June is around Rs 17 per liter which translates to around Rs 18 billion for refineries and OMCs.”

Meanwhile oil refineries want the government to revise downstream petroleum policy, bailout package and fortnightly pricing to avoid severity of petroleum products shortage in future.

Related: Petrol Pricing in Pakistan Likely to be Deregulated

Due to the Covid-19 pandemic, the total inventory losses of the refineries sector in Pakistan surged to Rs 34 billion in only March and April 2020. To put this in context, the combined financial losses of the four refineries in the country were Rs 47 billion for the last two financial years i.e. FY2018-19 and FY2019-20. According to Chief Executive Officer (CEO) of Attock Refinery Limited, Mr. Adil Khattak:

“The refineries have been forced to operate at low throughput. All the facts have been brought to the knowledge of the government and in this regard, urgent support has been sought to ensure sustainability of refinery operations. It must be noted that refineries should be enabled to run at 100% capacity to reduce reliance on imports.”

He said that the business environment of the country during the last two years has remained very challenging and disturbing for oil refining sector in Pakistan.

From: Dawn, Tribune

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