Refineries Protest Government’s Decision on Diesel Imports

Local Refineries Oppose Import Authorization for High-Speed Diesel.

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ISLAMABAD – All five of Pakistan’s oil refineries have formally protested the government’s decision to allow the import of high-speed diesel (HSD).

The refineries assert that this decision violates agreements made during the Product Review Meeting—a forum involving the government, the Oil & Gas Regulatory Authority (Ogra), and the oil industry—that mandated procurement from local refineries before any imports.

Concerns Raised by Local Refineries

In a joint letter addressed to the Ogra chairman, the minister, and the secretary of the Petroleum Division, the five refineries—Attock, Parco, National, Pakistan Refinery, and Cynergico—highlighted their concerns.

They reported difficulties in offloading their products due to oil marketing companies (OMCs) failing to uplift the committed quantities of HSD and petrol over the past two months.

Request for Upliftment of Local Products

The refineries requested Ogra to instruct OMCs to prioritize uplifting locally produced POL (petroleum, oil, and lubricants) products essential for the smooth operation of refineries.

They argued that only actual deficit volumes should be imported.

Opposition to Recent Import Decision

The refineries specifically opposed Gas & Oil Pakistan’s (GO) request to import 15,000 tonnes of HSD in June. They noted that ample HSD stocks were available locally, and the import request was not aligned with the import plan finalized on June 11. Despite this, Ogra allowed GO to proceed with the import, a decision the refineries found “most disappointing.

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Impact of Smuggled Products and Excessive Imports

Refinery executives expressed frustration over the influx of smuggled products and the resultant heavy inventories of HSD. They criticized GO’s preference for imports over local purchases, which they felt was unjustified and harmful to local refineries.

Challenge to Ogra’s Rationale

The refineries contested Ogra’s stance on offering competitive commercial terms to OMCs, arguing that such terms should not undermine Rule 35(g) of the Pakistan Oil Rules 2016. They claimed that adhering to this rule is crucial for prioritizing local products over imports to conserve foreign exchange and enhance energy security.

Demand for Reassessment of Import Permissions

The refineries called on Ogra to reverse its decision allowing HSD imports by GO. They urged that OMCs, including GO, should first fulfill their local product commitments before seeking import permissions, given the volatile market conditions and available local stocks.

Ogra’s Response

An Ogra spokesperson justified the decision by stating that local production of petrol and diesel is insufficient to meet local demand. Thus, OMCs are permitted to import these products, with import planning typically conducted in the Product Review Meeting held a month in advance.

The ongoing conflict between local refineries and regulatory authorities over diesel imports highlights the challenges of balancing local production capabilities with market demands and the implications for the country’s energy security and economic stability.

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