Oil Industry Warns OGRA's Fuel Price Reduction Focus Damages Sector: OCAC

In a recent development, the Oil Companies Advisory Council (OCAC) has expressed concern over the singular focus of the Oil and Gas Regulatory Authority (OGRA) on reducing fuel prices, asserting that it is causing significant harm to the industry. In a letter addressed to the Chairman of OGRA, OCAC emphasized the need for open dialogue rather than issuing press releases.

OCAC reminded OGRA of the essence of the Economic Coordination Committee's (ECC) decision, which aimed to ensure accurate recovery for inventory acquired at prevailing rates. While OGRA claimed to have applied the ECC decision "in letter and spirit" in its press release, OCAC disagreed, highlighting the unjustified losses caused to the industry by the implementation of a new High-Speed Diesel (HSD) premium.

According to OCAC, OGRA's approach neglected the adverse impact on the industry, as a distorted application of the ECC decision was made to reduce prices. The Council argued that such an approach would not have been taken if the premium had been increasing. OCAC further pointed out that various adjustments made over time were not in line with the pricing formula and were detrimental to the oil industry.

The Council cited specific instances, such as adjustments made in the second fortnight of November 2022, where unjust reductions were made to avoid price increases. Additionally, in the first fortnight of August 2022, the treatment of the exchange rate in pricing was altered, potentially affecting the availability of HSD in the country.

OCAC firmly believes that OGRA's relentless focus on price reduction is causing damage to the industry. It called for an urgent meeting with industry representatives to thoroughly assess the situation based on factual evidence, mitigate potential future pricing impacts, and reach a mutually agreeable resolution.

The oil industry's concerns highlight the need for a balanced approach that takes into account the interests of both the industry and consumers. It remains to be seen how OGRA will respond to OCAC's request for dialogue and whether a resolution can be reached to address the industry's grievances.