State-owned Pakistan State Oil (PSO) refused to take responsibility of oil imports on behalf of other Oil Marketing Companies (OMCs), saying market situation was volatile with regards to product availability, The New learnt on Saturday.
PSO said suggestions put forth by Oil & Gas Regulatory Authority (OGRA) were not only anti-competitive, but also appeared to be contrary to the public interest as it would most likely create supply chain related, causing the general public to suffer. Even otherwise, the suggestions would create legal implications, a letter to Director General Oil Petroleum Division read.
“The market situation is highly volatile with regards to product availability and like other OMCs, PSO also is going through same strenuous situation.”
The public oil company stated it was meeting its obligations and arranging products irrespective of commercial considerations and additionally bearing the rising huge circular debt.
“If PSO can import from all over the world while complying with PPRA [Public Procurement Regulatory Authority] Rules, we fail to understand why other OMCs have not been able to secure a diversified supply chain despite having no such compulsions/restrictions.”
It also objected to lifting of ban on inter-OMCs sale and believed that inter OMC sale was against the public interest for the reason that it was anticompetitive.
“If PSO is forced to sell in the market, it will sell at full margin without jeopardising its commercial interest,” it said, putting on record that PSO had been under investigation on inter-OMC sales and was resultantly declared illegal by concerned authorities.
Despite recommendation from OGRA, PSO showed its inability to imports of petroleum products on behalf of OMCs. OGRA suggested to Petroleum Division that international tenders to be called by P50 for imports of products for other OMCs when the authority gave its recommendations to the government in the backdrop of reimbursement of Price Differential Claims (PDC).
It also declared that country’s products days’ cover was already at a critical level on insufficient imports by several OMCs in previous few months, which called for immediate enforcement of licensing requirements for stock replenishment on the faltering OMCs.
According to PSO, there were challenging times ahead and it could endeavor to be at the forefront of utilising its best efforts in accomplishing its mandate.
P50 had only one fuel supply contract under government-to-government (G2G) arrangement with Kuwait Petroleum Corporation (KPC) for supplies of Gasoil (HSD) and the contractual volumes with KPC was already fully utilised to cater PSO’s own requirement of market share, which even otherwise were only between the parties thereto and the volumes under the same could not be resold or offered to any other OMC, the letter read. It may be noted that as PSO’s increased market share and additional unplanned consumption of High Speed Diesel (HSD) in power sector in the months of January and February 2022, P50 had to procure two additional HSD cargoes through international tenders in the month of March 2022. For Motor Gasoline (MOGAS), P50’s entire imports are through international tendering system and there is no G2G arrangement in place.
PSO informed that it had already awarded two (02) HSD cargoes in March 2022 in a timely and proactive manner through tendering process (in addition to three cargoes planned with KPC), however, as per international market situation, the public oil company did not receive any bids for its tenders opened for delivery of HSD cargoes in first fortnight of April 2022. Resultantly, it again floated an urgent tender for the same period.
The letter also read that PSO was struggling in opening letter of credits (LCs) for its own imports amid increasing oil prices and its receivable under circular debt (currently at Rs464 billion), and the company could not open any LCs for other imports.