The Oil Marketing Association of Pakistan (OMAP) is pressing for a comprehensive review of the exchange rate calculation methodology, citing substantial losses incurred by private Oil Marketing Companies (OMCs) due to currency fluctuations.
In a letter addressed to the Ministry of Energy and Petroleum Division, OMAP highlighted the urgent need for a revised pricing formula that aligns with market realities. The association expressed its concern about the considerable exposure of private OMCs to losses under the current methodology and requested a collaborative meeting with government officials to enhance the existing formula.
“We seek a revision that aligns with ground realities and shields private OMCs from perpetual suffering under the current methodology. To this end, OMAP is seeking a meeting with government functionaries to collaboratively enhance the existing pricing formula, ensuring it does not continue to adversely impact private OMCs and refineries,” the letter said.
The letter emphasised the industry-wide challenges posed by exchange rate fluctuations, leading to significant losses for OMCs and refineries. OMAP specifically called for compensation based on actual losses rather than the current formula benchmarked against the exchange losses and gains of the state-owned Pakistan State Oil (PSO).
While acknowledging the positive shift in the pricing formula to, an average of Arab Gulf Platts, from September 1, 2020, OMAP pointed out lingering anomalies that require immediate attention. The association stressed the need for a prompt review of the methodology for adjusting exchange losses and gains to ensure fair accommodation for all industry members.
Published in The Express Tribune, November 16th, 2023.