OMCs REDUCED OIL SUPPLY TO FILLING STATIONS

OIL MARKETING COMPANIES BECOMING A CARTEL

AMANULLAH BASHAR
June 09 - 15, 2008

Oil Market Companies (OMCs) have reduced supplies of petroleum products especially motor gasoline and diesel by 50 percent consequently putting the filling stations into an awkward situation to deal with the customers besides facing a drastic cut in their business.

Explaining the prevailing situation, Abdul Sami Khan, Chairman Pakistan Petroleum Dealers Association(PPDA) and Chairman CNG Dealers Association alleged that the OMCs have assumed cartel like role to press the government for the recovery of Rs70 to Rs100 billion outstanding against the government.

The government, it may be recalled, was absorbing the differential of oil prices instead of passing on to the consumers since January 2007 however the payment of the absorbed money to the oil marketing companies was also being piled up against the government due to deferred payment. Now the outstanding have stacked to the tune of Rs100 billion naturally pricking the mind of the OMCs for the recovery of the stuck up amount.

Due to liquidity crunch, the oil marketing companies have reduced the import of diesel and petrol and a rationing like situation seems in the offing if the remedial measures were not taken by the government going forward.

The global oil hike while having their serious fall out on the end users, the oil crisis have brought a windfall business for the refineries which have been allowed to export motor gasoline as the abnormal increase in oil prices have drastically reduced the demand for petrol not only in Pakistan but elsewhere in the world.

However, in the face of short supply of the fuel, the petrol dealers have demand of the government to put a cap on the refineries asking them not export oil until and unless situation returns to normalcy. It is amazing to note that on one hand the government loudly declared increasing oil import bill but never disclosed how much the country is earning through exports of petrol being earned by five or six refineries in the country.

CNG

These oil marketing companies, Sami alleged, were out to destroy the CNG regime by strongly suggesting to OGRA raise CNG prices at par with petroleum products to protect their interest in this country, he remarked.

The Oil Companies also stop supplying fuel to the filling stations or the dealers on the eve of the fortnightly oil price revision in the hope to making money by suspending the supply on that occasion. The dealers having no option but add to the hardships of the consumers by refusing to the approaching customers.

 

The prevailing acute shortage of petroleum products and short supply by the oil marketing companies (OMCs), is seriously affecting daily sale of the dealers. On the contrary, the government and OMCs were alleging the petrol pumps for withholding of oil products, especially on or around the dates of fortnightly revision of oil prices.

On June 2, Abdul Sami Khan, Chairman, Pakistan Petroleum Dealers Association(PPDA) led a delegation of PPDA & CNG Dealers Association had separate meetings with the Chairman FBR, Secretary Petroleum, Chairman OGRA, DG Oil & DG Gas to discuss the matter of shortage of petroleum products and other matters of CNG. He regretted that these officials did not extend any encouraging response.

Reacting over what he called the cold and indifferent attitude of the officials towards the serious issues, the PPGA has decided to bring into the notice of government that the if the dealers were not assured regular supplies on June 14 & June 15 at the time revision of oil prices, the short supply at filling stations would be at the risk of the government.

If it is proved that the OMCs despite having oil products were maintaining regular supply, the dealers intended to proceed further to get justice from the court of law.

Meanwhile, CNG Dealers have also lodged a protest over the proposed imposition of Gas Development Levy (GDL) on CNG by the government. This suggestion has also been initiated by the Oil Marketing Companies which would prove burdensome to the industry and the consumers.

He said CNG being the cheapest fuel has attracted investment worth million of dollars besides saving huge foreign exchange per annum as an effective oil import substitute.

Actually, the government wants to recover losses of petroleum products by levying the GDL tax on natural gas. If this step was taken and the proposed tax was imposed, the CNG price will come closer to the oil prices. This would seriously hurt the well established CNG Industry and consequently million of rupees of the stake holders will go down in drain. He appealed to the dealers not to invest more in CNG industry on the back of unpredictable conditions.

The petroleum dealers also appealed OGRA to redress the sufferings of Sindh dealers who have to visit Islamabad frequently to get resolved their day to day problems. He suggested that establishment of a sub office of OGRA in Karachi would go a long way to mitigate dealers difficulties.

They also urged the FBR chairman for abolition of duty on CNG spare parts to combat the storm of price hike currently hitting the country. CNG compressors and dispensers have become old while dollar and pound sterling value has gone up against rupee resulting in unusual rise in cost of CNG spare parts machinery and others.

Meanwhile, the Chairman of All Pakistan Lubricants Manufacturer Association Mian Zahid Hussain says that this fresh rise in lube base oil would result in increase by 10 rupees per liter in vehicle fuels. The base oil prices have gone up by 46 rupees from July 2007 to June 2008, increasing cost of inputs for the companies producing lubricants for vehicles and machinery besides prompting increase in sale of smuggled lubricants in the market.