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Weekly POL price revision criticised

September 02, 2012


ISLAMABAD, Sept 1: Filling station owners on Saturday expressed concern over a government decision of weekly price revision in POL products.It would not only create shortage of the commodity, but would also create confusion, the filling station owners added.

The petroleum ministry pursued the idea of weekly price adjustment despite an opposition by the Oil and Gas Regulatory Authority (Ogra).

The fortnightly price revision was introduced in 2002 by the Oil Companies Advisory Committee which continued till 2007.

But in 2008, monthly fuel pricing regime was implemented on the grounds that it was beneficial for consumers.

Oil companies and refineries are in favour of fortnightly price revision as it may help reduce the impact of circular debt.

“If prices continue to rise, inventory loss becomes too high to be maintained,” said an official of the refining sector, adding that it would also benefit consumers if prices decrease internationally.

In case of monthly adjustment, the most serious issue we face is panic-buying during last days if prices are set to rise --leading to shortage in supplies, whereas companies push to lift products if prices are determined to decline,” said Sami Khan, Chairman, Pakistan Petroleum Dealers Association.

Sami Khan added that “now this pull and push situation” would continue all the month.

Oil filling oil stations criticised government’s deregulation policy on the grounds that it has given free hand to oil marketing companies to determine oil prices at their free will.

The stations owners said that the situation would allow government to fix prices at a much higher rate than what has happened at the international level.

Chaudhri Zafar Ilahi, Chairman, Pakistan Petroleum Dealers Association, North Zone, urged the Competition Commission of Pakistan (CCP) to take note of the situation.

“The system is not computerised and pumps would continue to sell products at higher prices for one or two days if prices fall,” an Ogra official said, adding that it is not easy to monitor all filling stations across the country.

Compared to the pricing mechanism adopted by the OCAC and Ogra, the current system is almost totally secretive and is managed by the largest oil-marketing firm of the country – PSO, which is a state-run enterprise.

“Since PSO has around 60 per cent share in diesel market and around 52 per cent of the petrol sale in the country all other OMCs follow prices determined by us,” said a senior official of Pakistan State Oil.

He said that the product prices are determined in a mix of import price and the local refinery prices.

But filling stations pointed towards lack of transparency in the system, because unlike OCAC or Ogra, the OMCs and refineries do not place their product price at their websites.

An Ogra official said that they are not authorised to conduct audit of OMCs to determine the fair price of petroleum product.

However, an official of the petroleum ministry stated petroleum is a highly managed sector around the world and no malpractice can be committed.