The Economic Coordination Committee (ECC) has approved an additional Rs11.73 billion in supplementary grant to oil marketing companies (OMCs) to ensure the uninterrupted supply of the commodity.
On the other hand, oil prices rose over $1 on Wednesday in the international market, bouncing back after earlier declines, as Russia’s invasion of Ukraine continues to stoke volatile trading with ceasefire talks the latest market trigger.
Brent futures were up 97 cents, or 1%, at $100.88 a barrel on Wednesday. US West Texas Intermediate crude rose 45 cents, or 0.5%, at $96.89 a barrel. Both contracts had earlier declined more than $1 a barrel, with Brent falling to $98.86 a barrel and WTI easing to $94.90 a barrel earlier in the session.
The EEC meeting chaired by Finance Minister Shaukat Tareen approved a proposal to allocate an additional Rs11.73 billion in supplementary grant to meet expenditures on the payment of price differential claims (PDC) until March 31, 2022.
According to a statement issued by the finance ministry, the Petroleum Division, to address the concerns of the Pakistan State Oil (PSO)and other OMCs, had submitted a summary stating that the PDC would be applicable to sales of petroleum products rather than to the procurement of products, it added.
The ECC approved the additional grant within a week after it approved Rs20 billion to OMCs. In total, the government has approved Rs31.7 billion to OMCs to offset the PDC in wake of the lowering of oil prices by R10 per litre by the government.
Earlier, the PSO had warned of an immediate crisis of petroleum products in the country due to insufficient imports by several private oil marketing companies (OMCs) in the last few months.
In a letter written to the Petroleum Division — which, on a request of OGRA, had asked the state-run oil company to issue international tenders to for imports of products for other OMCs — PSO General Manager (supply) Asad R Faiz said: Country’s products days’ cover is already at a critical level due to insufficient imports by several OMCs in previous few months which calls for immediate enforcement of licensing requirements for stock replenishment on the faltering OMCs”.
The letter said: “It is because of this default that the days’ cover situation of such OMCs in particular and country, in general, has deteriorated by around five (05) days considering the high demand for harvesting season is just around the corner. The SO general manager said that it is stated that “as per the OGRA Ordinance 2002 it is the primary responsibility of OGRA, inter a/ia, to foster competition and protect the public interest. The suggestions put forth by OGRA are not only anti-competitive but they also appear to be contrary to the public interest as it would most likely create supply chain-related issues due to which the general public would suffer. Even otherwise, the suggestions by OGRA would create legal implications.
