Oil marketers seek resolution of road freight, Sindh cess issues
The OMAP chairman stressed that industry stakeholders were eager to work closely with Ogra to implement the decisions promptly and efficiently. photo: afp
The Oil Marketing Association of Pakistan (OMAP) has urged the regulator to resolve issues pertaining to the deduction of road freight charges and the Sindh Cess Tax.
The long pending issues such as oil marketing companies’ (OMCs) margins and devising strategies to optimise them, the deduction of road freight (45%) and pipeline freight charges, the reversal of Sindh Cess Tax and the foreign exchange loss adjustment were of great importance during discussions, the association said.
“Now, it is the need of the hour to strictly take up these agreed items as a top priority. Any delay in implementation will lead to further damage to the overall industry,” the oil marketing companies’ body said in a letter to the Oil and Gas Regulatory Authority (Ogra) chairman.
“We assure you of OMAP’s unwavering support and cooperation in all the above matters agreed upon during a meeting.”
The meeting was held between the OMAP office-bearers and executive committee members, and Ogra chairman and his team on August 1, 2023.
During the huddle, both sides extensively discussed the challenges faced by the oil industry and explored potential solutions to address them, OMAP Chairman Tariq Wazir Ali said in the letter.
He pointed out that it was agreed that Ogra would hold all future meetings concerning the inland freight equalisation margin (IFEM) independently, considering its vast in-house institutional capacity and capability.
The decision signified a pivotal step forward as it ensured transparency, efficiency and impartiality in crucial decisions having direct impact on the sustainability of oil marketing operations, he emphasised.
OMAP expressed its deep concerns over the involvement of the Oil Companies Advisory Council (OCAC) in Ogra’s regulatory duties including the crucial decision-making done in product review meetings (PRM).
“As you are well aware, Ogra’s autonomy and independence play a pivotal role in ensuring the effective oversight of the energy sector. However, it has been noticed that OCAC continues to influence upon Ogra’s affairs, posing a significant threat to its impartial functioning,” he said.
Last year, the Ministry of Petroleum took a crucial step by granting Ogra the necessary autonomy to operate with transparency and fairness as the regulator was entrusted with full authority over critical matters such as PRM, IFEM, “laycan” permissions and more.
The decision was the outcome of consultations with the Ogra management.
“OMAP appreciates Ogra’s unconditional concurrence and agreeing with our legitimate point of view and commitment to diminish the role of OCAC,” the association chairman said in the letter.
He argued that the reliance on OCAC for such meetings posed significant challenges to the OMCs, which were directed to approach the OCAC and burdened with a substantial annual payment of Rs240 million on account of forced consultancy services.
“We are heartened by Ogra’s commitment to leveraging its team of experts and industry-specific specialists to manage these meetings, considering the vast capacity it holds in-house vis-a-vis its mandate of ensuring a level playing field.”
The chairman stressed that the industry stakeholders were eager to work closely with Ogra to implement the decisions promptly and efficiently, ensuring that the agreed-upon issues were addressed on an immediate basis.
Published in The Express Tribune, August 5th, 2023.
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