OGRA, in a letter to Petroleum Division, Ministry of Energy, also suggested that international oil pricing and supply chain monitoring of petroleum products should be done on daily-basis.
The oil sector regulator also called for the formation of a high-level ministerial committee to review the situation on weekly basis.
According to copy of letter available with The News, due to geographical situation (Russian-Ukraine war), the energy markets are witnessing extreme price volatility, which will hamper procurement of already short fuels from international market.
With the view to avoid shortage and manage the energy stock effectively, OGRA proposed that national requirement may be aggregated and procured by PSO under the deferred oil payment arrangement, if possible, otherwise the state oil company should float an international tender to procure the same for the entire industry and allocate to OMCs to avoid any shortage/dry-out in the country.
OGRA noted that due to challenges, there was an urgent need to diversify international suppliers and it did give instructions to this effect in a recent product review meeting.
In order to achieve diversification, inter-OMCs sales should be allowed immediate basis.
“This will help increase the cargo size of imported parcels for getting better terms and prices and optimise the port utilisation,” the regulator said.
OGRA also strongly suggested that commercial banks be asked to increase OMCs’ credit lines promptly in view of rupee devaluation and volatile international petroleum prices -especially for importing diesel volumes to meet harvesting season demand during March-June 2022.
“OMCs alone have to maintain 20-day stock and dead stock in white oil pipeline, whose approximate cost is roughly Rs250 billion. The figure will get higher in proportion to the increase in international price,” OGRA said.
Therefore, commercial banks be advised to provide financing to oil marketing companies on soft terms to absorb enhanced working capital requirements.
The oil sector watchdog also proposed that international oil prices, PDC (price differential claim) amount as a consequence, and supply chain monitoring must be done on daily basis.
Further a high level ministerial committee should be formed to review the situation on daily basis during the prevailing volatile situation so that corrective measures could be taken, OGRA said. “It is imperative for the security and uninterrupted continuity of the international oil supply chain that OGRA’s recommendations are adopted on immediate basis for managing energy challenges,” the authority said.