Oil and gas declared essential services amid lockdown

Published March 26, 2020
The government also notified Rs15 per litre reduction in prices of petrol, diesel and  kerosene in line with the announcement made by the prime minister. — AFP/File
The government also notified Rs15 per litre reduction in prices of petrol, diesel and kerosene in line with the announcement made by the prime minister. — AFP/File

ISLAMABAD: The government on Wednesday notified oil, gas and related operations as ‘Essential Services” to avoid any disruption due to the prevailing lockdowns in some provinces.

It also notified Rs15 per litre reduction in prices of petrol, diesel and kerosene in line with the announcement made by the prime minister but rejected calls by oil marketing companies and retailers for compensation against inventory losses.

Petroleum Assistant Nadeem Babar said the operations of some sectors in the oil and gas, including LNG port handling, had come under pressure because of provincial lockdowns and special intervention had to be made to ease the situation.

Separately, in a notification issued by the Petroleum Division said the supply of oil and gas and related operations were essential services to meet energy requirements of the country. Hence, the movement of all E&P companies operating in Pakistan, their subcontractors, personnel, equipment and vehicles was essential to keep the services up and running.

Therefore, it asked all the provincial governments and district administrations to allow, in the best national interest, unhindered movement of oil and gas companies interalia Oil and Gas Development Company, Pakistan Petroleum, United Energy, Pakistan Petroleum Ltd, Eni, MOL Group, Mari Petroleum, Kuwait Foreign Petroleum Exploration Company, Polish Oil and Gas, OPL, Orient Petroleum and Pakistan Oilfields, including their subcontractors, personnel and vehicles, so that uninterrupted supply of vital energy requirements of the country may be ensured during the ongoing Covid-19 crisis.

Responding to a question at a news conference, Babar said the OMCs had been enjoying the windfall inventory gains all along the rising petroleum prices and the government never asked them for sharing those. The same mechanism would continue while they faced certain inventory losses and it has been part of the petroleum business risk as the OMCs were required to maintain stocks for certain days.

However, he said the government would examine if they faced any exchange rate loss owing to a price cut a week earlier than scheduled and put up a case before the Economic Coordination Committee (ECC) of the Cabinet. He said the OMCs had also raised a demand for fortnightly or weekly price revisions instead of monthly to minimise their inventory losses.

He said the government would not make piecemeal changes to oil pricing but look into the entire mechanism holistically in a month and suggest a package of pricing strategy to the ECC given that the current phenomenon of international rate fluctuations would not go away in the near future.

Responding to another question on relief in electricity prices in the shape of three-month instalments announced by the prime minister, the petroleum assistant said there would be no late payment surcharge on instalments and the billing of one month would be recovered in three before starting recovery of the next period.

In case of continuation of COVID-19 crisis for three months, the full recoveries from lower income groups would be made in nine months.

He said the LNG terminal operations were affected by a lockdown in Sindh due to unavailability of staff and the federal government had to issue standard operating procedures to overcome the challenge. Likewise, the upliftment of oil from fields and ports was also crucial to avoid safety problems at the fields and ensure supplies for which special instructions had been issued.

Published in Dawn, March 26th, 2020

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