ISLAMABAD: General masses are facing artificial shortages of petrol and high-speed diesel (HSD) across the country after the government's decision to reduce ex-refinery price of petrol and increase the petroleum levy (PL) in a price revision for June in line with decline in petroleum prices in the international market.

On Sunday, the government announced to reduce ex-refinery (cost of supply) by Rs11.74 per litre from Rs35.73 per litre to Rs23.99 per litre. The government increased the petroleum levy on petrol from Rs23.76 to Rs30 per litre.

While talking to Business Recorder, an official of Petroleum Division said, “Oil and Gas Regulatory Authority (OGRA) is responsible to ensure sufficient petrol and diesel stock in the country as they procure enough petrol to meet the consumption of the month."

The oil and gas regulator has asked the Hydrocarbon Development Institute of Pakistan (HDIP) to physically inspect randomly, and confirm the availability of petrol and high-speed diesel at depots, retail outlets (petrol pumps) and refineries of all oil companies, and submit details till June 3rd. The authority also wrote four letters to the Oil Marketing Companies (OMCs) to provide depot-wise sale and stocks data in respect of petrol and diesel for the past three months (March-May 2020) till June 1st.

The oil sector's regulatory body has further asked the HDIP to randomly inspect these facilities to ensure sufficient quantities of petrol and diesel is available, and in case of shortage, report to the OGRA.

Spokesperson of the OGRA told Business Recorder that the authority had power to impose fine and any other penalty under the OGRA Ordinance against the OMCs and retailers who are found violating the rules.

Sources said that oil refineries opt to cut production due to cheaper imports by the Pakistan State Oil (PSO), leading to negative margins. Oil refineries already informed the Petroleum Division that they had faced inventory losses worth Rs31 billion in March and April following lockdowns that shook global oil markets.

Refineries had requested the government to either freeze ex-refinery price of May for June or announce fortnightly prices.

Refineries foresee a serious shortage of petroleum products in the month of June 2020 due to various issues.

The Economic Coordination Committee (ECC) on May 30th turned down a plan of approving new oil pricing formula and freezing oil prices till June 15th, in a bid to bail out oil industry.

The Petroleum Division had warned the economic decision making body that oil stock would dry out, if oil prices are not put on hold till June 15th as an incentive for oil importing companies to import oil.

On Tuesday, All Pakistan Petroleum Retailers Association has demanded a detailed probe into nationwide fuel shortage, and asked the authorities to fix responsibility.

All the oil companies except PSO delayed import of petroleum products and violated the rules regarding maintaining the fuel stock, which has resulted in the scarcity of petrol, diesel, and other products across the country, it said.

This was observed in a Zoom web meeting in which leaders of the All Pakistan Petroleum Retailers Association from all four provinces participated.

Speaking on the occasion, Ghiyas Abdullah Paracha said that unnecessary delay in the import of petroleum products had inflicted a loss of billions of rupees to the government in revenue, while the masses were deprived of the benefit of reduced prices. He said that presently oil marketing companies had stopped supply to the petrol pumps, while some filling stations were getting reduced supplies, which were not enough to satisfy the demand of consumers resulting in serious problems.

Ghiyas Paracha said that the shortage of petroleum products could hit the transport sector and lead to increased fares of public transport; therefore, petroleum products should be imported immediately, which companies should be made to abide by the rules and regulations regarding keeping stock of petrol and diesel to meet any emergency.

Petroleum dealers have already suffered a lot during the lockdown and now a scarcity of fuel is hitting their businesses, he said, adding that the issues of owners of filling stations should be resolved, and a new pricing formula for refineries, oil marketing companies and dealers should be introduced. He said that the oil and gas sector needs a new pricing formula according to the changed local and global situation amid pandemic as the old formula was no longer workable.

Copyright Business Recorder, 2020