The Oil Companies Advisory Council (OCAC) has cautioned that the Oil and Gas Regulatory Authority’s (OGRA) sole focus on lowering fuel prices is harming the industry.
“We write in response to our letter no. OGRA-520 dated July 17, 2023, and the press release issued by OGRA on the subject on July 18, 2023.” “We would like to express our deep concern about OGRA’s decision to issue a press release rather than seeking Industry input through a meeting or responding to OCAC’s aforementioned letter,” the Council stated in a letter to OGRA Chairman.
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OCAC reiterated that the essence of ECC’s decision no ECC-307/34/2020, dated July 28, 2020, was to ensure that the Industry receives an accurate recovery for inventory acquired at the rates in effect the previous fortnight; OGRA, in the above-mentioned Press Release, claimed that “ECC decision has been applied in letter and spirit,” but the Council disagrees.
“OGRA has completely ignored the fact that the implementation of a new HSD premium has resulted in significant and unjustified loss to the industry.” “We understand that this distorted application of the ECC decision was done to reduce the price at the expense of the Industry, and a similar approach would not have been taken if the Premium was increasing,” the company said.
OCAC stated that over time, several alterations were made that were not in line with the pricing formula and were detrimental to the oil business, citing a few notable examples:
To avoid a price hike in the second half of November 2022, OGRA made the following unfair modifications.
On MS and HSD, IFEM was cut by Rs. 3.21 and Rs. 2.72 per liter, respectively. Furthermore, the Exchange Loss Adjustment for MS and HSD was cut by Rs. 3.01 and Rs. 2.11 per liter, respectively.
ECC approved a revision to OMCs’ margins on motor fuels on October 31, 2022, for both MS and HSD; this revision was not reflected in prices.
1st Fortnight August 2022-Price computation for August 1, 2022 was altered to use the Average USD Exchange Rate rather than the Rate prevailing on the final working day.
The Council believes that the impact of this adjustment will cripple the industry and have an influence on the availability of HSD in the country if no HSD is imported at a lower premium. “We expect the Regulator to be fair to the Industry and consumers; however, we believe that OGRA’s singular focus on price reduction is harming the Industry,” the statement continued
OCAC requested an urgent meeting with industry representatives to thoroughly analyze the situation on the basis of factual information, limit the potential impact on future pricing, and seek a mutually accepted conclusion.
