ISLAMABAD (Kashmir English): The Oil and Gas Regulatory Authority (OGRA) on Tuesday denied news of a fuel shortage in Pakistan, assuring that supplies of petroleum products are normal throughout the country.
In a formal statement, an OGRA spokesman admitted to a temporary delay in clearing imported petroleum consignments a few days ago but assured that things have now returned to normal.
The spokesperson further stated that two ships loaded with petrol and diesel from two different companies were cleared today, further stabilizing the country’s supply.
The clarification comes against the backdrop of industry concerns after the Sindh government moved to reintroduce a 100% bank guarantee clause under the Sindh Infrastructure Development Cess (IDC). The decision reportedly stranded several petroleum cargoes in Karachi ports, raising fears of an imminent nationwide shortage.
The Oil Companies Advisory Council (OCAC) advised that the new IDC policy may disrupt the nation’s fuel supply chain within days unless settled immediately.
In a letter to the Sindh chief minister and federal authorities, the OCAC stated that at least five big shipments for PSO, HPL, PGL, and Parco are stuck waiting for customs clearance.
Since petrol stocks at Keamari were dwindling, the sector warned that the scenario had the potential to cause dire shortages, particularly during the current agricultural season.
The OCAC warned that the oil supply chain is “on the point of collapse” and that it would take more than two weeks to recover if cargoes are not cleared promptly.
The contention is over the 1.8% IDC imposed by the Sindh and Balochistan governments on petroleum imports. While the case continues to be heard by the Supreme Court, the Sindh Excise Department has revoked an interim agreement that had hitherto permitted undertakings rather than bank guarantees, now insisting on billions of rupees of guarantees per vessel, a burden claimed to be too heavy for the industry.
With controlled prices, strait-jacketed credit lines, and razor-thin margins, the OCAC puts the estimate of IDC that adds more than Rs. 3 per liter to the cost of fuel, which cannot be recovered from customers due to prevailing pricing norms.
The council is asking the Federal Board of Revenue and Pakistan Customs to clear all petroleum cargoes at zero bank guarantees and is appealing for a policy-level solution.
Suggestions are formal acceptance of petroleum pricing as a federal subject, incorporation of IDC within fuel pricing mechanisms, and a mechanism for recovering arrears of IDC dues.
The OCAC further commented that Punjab and Khyber Pakhtunkhwa have already exempted petroleum products from IDC under federal jurisdiction.
