Say such revisions will higher mirror world market strikes, help environment friendly planning
Oil refineries have repeatedly lodged complaints and written letters to the regulator, urging facilitation within the disposal of their merchandise, which is important for clean operations. picture: REUTERS
ISLAMABAD:
Refineries have known as for a shift to weekly oil value revisions to higher mirror worldwide value actions, cut back pricing lags and assist environment friendly provide planning throughout the downstream sector.
At current, petroleum product costs are reviewed each fortnight. In a joint letter, oil refineries have expressed concern over the Oil and Gasoline Regulatory Authority’s (Ogra) conduct whereas deciding on diesel procurement.
OCAC, within the letter despatched to Ogra chairman, mentioned, “On the outset, we want to specific our critical concern concerning the skilled conduct of a (product assessment) assembly. Not solely did the problems raised stay inconclusive, but in addition the assembly was ended abruptly and swiftly, ostensibly attributable to one other assembly that Ogra had already scheduled.”
Specifically, it mentioned, no clear route was offered by the regulator in regards to the procurement of high-speed diesel (HSD) by the oil advertising firms (OMCs). In consequence, diesel sale preparations for the present month in addition to the upcoming month proceed to stay unsure, which complicates provide planning by the native refineries.
Within the absence of clear regulatory instructions on product buy, OCAC mentioned, the refineries proceed to face structural constraints in aligning manufacturing, inventories and dispatches, significantly throughout downward pricing developments. “This example impacts the orderly functioning of the market and undermines efficient provide planning throughout the worth chain.”
Furthermore, the place refinery provide obligations are enforced uniformly throughout pricing cycles, OCAC burdened that it’s equally necessary that the related regulatory framework operates constantly throughout market circumstances. “If procurement mechanisms stay constrained throughout downward pricing cycles, it might be acceptable to additionally assessment necessary refinery provide obligations throughout upward pricing developments, in order to keep away from coverage asymmetry and guarantee balanced market outcomes.”
With regard to jet gas imports, the trade physique mentioned that jet gas shouldn’t be linked with, or commingled with, HSD import cargoes in conditions the place there is no such thing as a precise requirement for HSD imports and needs to be mentioned individually.
Jet gas is a definite product with an unbiased/area of interest market and may, due to this fact, be imported individually on the idea of its personal demand and provide necessities.
Commingling of jet gas with HSD cargoes, the place HSD imports aren’t required due to an enormous glut, needs to be prevented, because it exacerbates present procurement constraints and additional complicates product offtake. Beneath the present downward pricing pattern, such an strategy would intensify stock pressures and undermine efficient provide planning, with out serving any underlying provide necessity, the letter mentioned.
Refineries additionally pointed to the “rising distortion” in jet gas pricing. When jet gas cargoes aren’t imported, home jet gas costs are considerably decrease, they mentioned, including that this divergence is adversely impacting refinery economics, thereby making Jet A1 manufacturing unviable on condition that they’re already incurring an enormous loss on furnace oil exports.
So as to handle the problems in a holistic method, they underlined the necessity for clear regulatory directives on HSD buy and sale preparations for the present and upcoming months to allow orderly provide planning by the refineries and OMCs.
They proposed that linking and commingling of jet gas with HSD import cargoes be prevented in conditions the place there is no such thing as a precise requirement for HSD imports within the nation. Additionally, jet gas pricing be aligned with the worldwide market benchmarks and import parity value, and the present pricing method be reviewed and revised to mirror prevailing market dynamics.
They emphasised {that a} weekly pricing mechanism needs to be thought of to higher mirror worldwide value actions, cut back pricing lags and assist environment friendly provide planning.
Refineries requested Ogra to think about the above issues and challenge clear post-PRM (product assessment assembly) coverage steering to assist orderly market operations, provide continuity and a constant regulatory framework.
