ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) on Friday notified up to 64 per cent increase in freight rates for the movement of oil products by oil tankers.

In a notification sent to the Oil Companies Advisory Council (OCAC), the regulator said it had revised uniform freight (road) slab rates with effect from Nov 1 and desired its implementation. The increase will stay in effect for next two years.

Although an agreement in this regard was finalised by the Petroleum Division, Ogra and All Pakistan Oil Tanker Owners Association (APOTA) and Oil Tankers Contractor Association (OTCA) on Oct 25, but the regulator took time in notifying revised rates.

As a result, APOTA and OTCA announced a fresh strike call for Nov 13, saying the issue had been lingering on for many years and the oil tanker owners were forced to operate their fleet at about six-year old rates while the prices of everything kept on increasing every year.

Therefore, the regulator had to immediately notify the agreed rates along with modified distance slabs. The two associations also called off the planned strike.Under the decision, the freight rates for within city movement were increased by 64 per cent while long distance charges were jacked up by about 19.7pc.

Oil tanker associations put off strike call for Nov 13

According to the notification, five different slabs were also revised. Earlier the slab-I was 0-64-killometre and freight rate stood at Rs220 per kilo-litre (KL or 1,000 liters). The slab has now been revised to 0-137km and would attract revised rate of Rs360.6 per kilo-litre. This slab would benefit mainly a couple of cities like Karachi and Lahore having expanded boundaries.

An official said the oil tankers, which usually carried up to 10,000 litres of oil at Rs2,200, would now charge Rs3,600 per trip.

The second slab of 65-1,979km being paid at the rate of Rs1.894 per kilo-litre per kilometre has been revised to 138-560km and would now attract a revised rate of Rs2.643 per kilo-liter per kilometre (KL/KM).

The third slab would now be based on 561-1,979km and would have freight rate of Rs2.667 per KL/KM instead of Rs1.894 per KL/KM.

The slab-IV will stay unchanged for 1,980km and above but its rates would be increased from Rs1.8374 per KL/KM to Rs2.1993 per KL/KM.

The last slab for hilly or kutcha roads was also increased from Rs3.386 per KL/KM to Rs4.0530 per KL/KM. The official said the freight rates for Azad Kashmir and Gilgit-Baltistan would remain unchanged for the time being and would be revised by end of this month in consultation with regional governments.

The official conceded that the the freight rates were earlier fixed in 2011 and there had been no increase for the past six years despite repeated demands by the transporters.

The transporters have told the government and the regulator that they were ready to adopt all the regulations of the regulator for safety, but this would be possible in phases with justified time frame given the fact that local industry did not have the capacity to upgrade around 15,000 tankers in one or two years.

Responding to a question, the official claimed the impact of increase in freight rates in the oil prices would be negligible.

Published in Dawn, November 11th, 2017