KARACHI: The Oil Companies Advisory Council (OCAC) has asked the Oil and Gas Regulatory Authority (Ogra) to review motor spirit (MS/PMG) price calculations for August 12 and 14, saying eligible Pakistan State Oil (PSO) import cargoes were not fully reflected under the government’s new daily petroleum pricing mechanism.
In a letter to chairperson of Ogra dated August 17, the industry body said the omission has created significant differences between the announced prices and those calculated under the approved formula.
The revised mechanism, notified by the Ministry of Petroleum on July 17, requires the weighted average of actual premiums, incidentals and customs duty on PSO-imported cargoes to be used when MS imports have taken place during the prescribed rolling seven-working-day period, the OCAC said.
According to the council, the price effective August 12 appeared to include the premium for MT Nave Atropos, which sailed on August 5 at a premium of $10.87 a barrel, but excluded the premium for MT Khairpur, which sailed on August 10 at $23.9 a barrel.
The OCAC’s calculations put the resulting ex-refinery price at Rs216.93 a litre, compared with Rs228.33 under its calculation, a difference of about Rs11.39 a litre.The council said it has identified a similar discrepancy in the PMG price determination effective August 14. It listed MT Nave Atropos, MT Khairpur, MT JN Safe and MT Twerk as cargoes requiring reconciliation against the applicable seven-working-day period.
Based on its calculations, the industry body estimated that the treatment of these cargoes created a difference of about Rs8.30 a litre in the cost-and-freight component.The OCAC said its request is not for an additional margin or preferential treatment, but for implementation of the government-approved methodology and recognition of actual eligible import costs incurred by oil marketing companies.
The council also pointed out that the daily price for August 15 has not been announced despite the reported availability of the required Platts data.Timely determination of daily prices was essential for the orderly functioning of the downstream petroleum market, particularly during the initial implementation of the revised mechanism, it said.
The OCAC recalled that during a meeting convened by Ogra’s finance department on July 19, the revised notification was presented to industry representatives, who were informed that prices would be determined strictly according to the prescribed formula.
The industry body urged Ogra to apply the mechanism consistently and transparently, saying any changes or refinements should be made through the prescribed process rather than unilateral deviations.
It also sought compensation for any under-recovery suffered by affected oil marketing companies on sales made between August 12 and August 17, subject to reconciliation and verification.
Prompt corrective action will help maintain the transparency, predictability and credibility of the new daily pricing mechanism and ensure uniform application of the methodology approved by the federal government, the OCAC said.
