OMCs allowed imports to bridge deficit
According to the FBR report, the worth of 39 importers was just Rs14.7 billion but they imported Rs201 billion worth of goods. photo: file
Being a net importer of both crude oil and refined products, Pakistan has not enough feedstock to feed refineries and therefore crude oil must be imported to utilise the refining capacity, say industry experts while responding to a news report that Pakistan State Oil (PSO) has lost 5% of its market share to Gas & Oil Pakistan Limited (GO).
They argued that refineries are not able to produce enough gasoline and diesel to meet the country’s needs, which further results in import of refined products by the oil marketing companies (OMCs).
Pakistan has a well-established system of ascertaining the requirement of crude oil and refined products. The Oil and Gas Regulatory Authority (Ogra) holds a product review meeting every month where the OMCs provide their sales forecast. The production by refineries is then compared with the forecast and the deficit is allowed to be imported by the OMCs.
Experts highlighted that refineries enter into supply agreements with the OMCs and agree on volumes to be picked up each fortnight. Most of the refineries have long-established relationships with the older OMCs, some of which are driven by their ownership while others are based on long-term ties.
Industry experts said that GO’s proactive approach in securing additional supplies from Aramco is a strategic move to prevent any crisis and ensure a steady supply to its customers. The company had lost its market share in the last couple of years due to the liquidity challenges resulting from the receivables stuck with the government in the shape of sales tax, freight and forex losses.
However, with some of the receivables released by the government and the investment from Aramco, GO is in the process of taking its share back and securing supplies to its 1,200 retail outlets.