To avoid monopoly, OGRA calls for re-inviting bids for fuel marking
Technical committee has already picked UK’s Authentix for implementing the programme
PHOTO: FILE
ISLAMABAD:
The Oil and Gas Regulatory Authority (Ogra) has suggested that bids for implementing a fuel marking programme should be re-invited from a larger forum in order to ensure a competitive process and avoid market monopoly.
The fuel marking programme has been designed to curb the mixing of cheap kerosene oil with high-speed diesel.
A senior Ogra official said a technical committee, headed by a representative of the Oil Companies Advisory Council (OCAC) and comprising representatives of Ogra, refineries and the Hydrocarbon Development Institute of Pakistan, had been constituted to implement the fuel marking programme.
The committee has completed the bidding process and picked Authentix of the UK as the successful bidder. The cost of fuel marking has been quoted up to Rs1.22 per litre for six months on a trial basis.
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Coming up with its comments on the proposed plan, Ogra said the regulator was bound to follow rules of the Public Procurement Regulatory Authority (PPRA). Therefore, prior to the inclusion of fuel marking cost in the kerosene oil price, the OCAC - which represents oil marketing companies - must adopt the bidding process prescribed in the PPRA rules.
Ogra said it would be constrained to include Rs1.22 per litre in the kerosene oil price. However, the regulator said, as one company prequalified for the bidding, it may be prudent to re-advertise on a larger forum to select in a competitive process in order to avoid market monopoly.
At present, Pakistan refineries are producing kerosene oil without adding any dye, which makes it difficult to detect its mixing with high-speed diesel. Under the fuel marking programme, a chemical will be added to kerosene oil to help identify and check adulteration.
The price difference between the two petroleum products is Rs33.40 per litre, that’s why oil barons are minting money by mixing kerosene oil with high-speed diesel.
The fuel marking programme will be run in phases. Initially, kerosene oil will be targeted and later other fuels such as high-speed diesel, light diesel oil and petrol will be covered under the programme.
An official pointed out that annual production of superior kerosene oil by domestic refineries stood at around 140,000 to 150,000 tons.
The mixing of petroleum products has not only caused shortage of kerosene oil in the domestic market, but it has also hit government revenues from high-speed diesel sales.
He said specifications of kerosene oil had also been revised in line with the latest fuel quality standards following consultation with the oil industry in order to discourage adulteration in petroleum products.
Oil and gas industry regulator Ogra will not participate in commercial phase of the fuel marking programme, but it has agreed to perform its role at the implementation and monitoring stages.
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According to a proposed mechanism, the actual cost of fuel marking may be included in the ex-depot sale price of kerosene oil through the monthly price revision.
The successful bidder has also agreed to offer a 3% price reduction on expanding the programme’s duration beyond the six-month trial period to one year.
Initially, the programme will be implemented for one year and then depending on results, it will be extended with the consent of Ogra or a fresh tender may be invited.
For the deregulated petroleum products, oil marketing companies may be directed to introduce and finance fuel marking from their profit margins.
Published in The Express Tribune, November 22nd, 2017.
The Oil and Gas Regulatory Authority (Ogra) has suggested that bids for implementing a fuel marking programme should be re-invited from a larger forum in order to ensure a competitive process and avoid market monopoly.
The fuel marking programme has been designed to curb the mixing of cheap kerosene oil with high-speed diesel.
A senior Ogra official said a technical committee, headed by a representative of the Oil Companies Advisory Council (OCAC) and comprising representatives of Ogra, refineries and the Hydrocarbon Development Institute of Pakistan, had been constituted to implement the fuel marking programme.
The committee has completed the bidding process and picked Authentix of the UK as the successful bidder. The cost of fuel marking has been quoted up to Rs1.22 per litre for six months on a trial basis.
OGRA proposes bid float for laying 430km oil pipeline
Coming up with its comments on the proposed plan, Ogra said the regulator was bound to follow rules of the Public Procurement Regulatory Authority (PPRA). Therefore, prior to the inclusion of fuel marking cost in the kerosene oil price, the OCAC - which represents oil marketing companies - must adopt the bidding process prescribed in the PPRA rules.
Ogra said it would be constrained to include Rs1.22 per litre in the kerosene oil price. However, the regulator said, as one company prequalified for the bidding, it may be prudent to re-advertise on a larger forum to select in a competitive process in order to avoid market monopoly.
At present, Pakistan refineries are producing kerosene oil without adding any dye, which makes it difficult to detect its mixing with high-speed diesel. Under the fuel marking programme, a chemical will be added to kerosene oil to help identify and check adulteration.
The price difference between the two petroleum products is Rs33.40 per litre, that’s why oil barons are minting money by mixing kerosene oil with high-speed diesel.
The fuel marking programme will be run in phases. Initially, kerosene oil will be targeted and later other fuels such as high-speed diesel, light diesel oil and petrol will be covered under the programme.
An official pointed out that annual production of superior kerosene oil by domestic refineries stood at around 140,000 to 150,000 tons.
The mixing of petroleum products has not only caused shortage of kerosene oil in the domestic market, but it has also hit government revenues from high-speed diesel sales.
He said specifications of kerosene oil had also been revised in line with the latest fuel quality standards following consultation with the oil industry in order to discourage adulteration in petroleum products.
Oil and gas industry regulator Ogra will not participate in commercial phase of the fuel marking programme, but it has agreed to perform its role at the implementation and monitoring stages.
Petrol price up Rs2.49, diesel Rs5.19
According to a proposed mechanism, the actual cost of fuel marking may be included in the ex-depot sale price of kerosene oil through the monthly price revision.
The successful bidder has also agreed to offer a 3% price reduction on expanding the programme’s duration beyond the six-month trial period to one year.
Initially, the programme will be implemented for one year and then depending on results, it will be extended with the consent of Ogra or a fresh tender may be invited.
For the deregulated petroleum products, oil marketing companies may be directed to introduce and finance fuel marking from their profit margins.
Published in The Express Tribune, November 22nd, 2017.