logo
Refineries for prioritising local production

Refineries for prioritising local production

Express Tribune21-03-2025

Listen to article
Pakistan's oil refineries have warned the regulator that over-reliance on imported fuels without properly prioritising local production will heighten risks to the energy supply chain and may cause disastrous consequences, especially at a time when the country is recovering from financial challenges.
In a joint letter written to the Oil and Gas Regulatory Authority (Ogra) chairman, the industry players said that local refineries formed the backbone of heavy industrial development and were intrinsically connected to the country's defence and energy security needs.
They also referred to Ogra's response in response to their earlier letter dated February 27, 2025 and a meeting with industry executives held on March 3, 2025 in Karachi.
"We wish to express our concerns regarding the contents of Ogra's aforementioned letter, which, unfortunately, appear to differ from the mutual understanding reached during the meeting," the refineries said in their latest communication.
During the meeting, they said, all refineries raised serious concern over the insufficient product offtake, resulting from the failure of oil marketing companies (OMCs) to procure the committed quantities of high-speed diesel and motor gasoline (petrol), as agreed in periodic meetings.
The refineries requested Ogra's intervention, which was acknowledged by the authority. "However, we believe that the explanation provided in Ogra's letter regarding the determination of insufficiency of local production before approving imports is misconceived and misleading."
As clearly stipulated under Rule 35(g) of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016, an OMC is required to give an undertaking to Ogra that it shall first lift the local product before opting for imports, the refineries said, arguing that it was the premise on which the OMCs were granted licences.
"Enforcement of such compliance rests with Ogra, which is equally empowered to take action against any defaulting OMC under Rule 69 of the Ogra Rules 2016."
Moreover, the refineries stressed that it was Ogra's responsibility to protect the public interest. Allowing imports when local production is not being lifted and at the expense of the country's foreign exchange and consumer prices (resulting from the higher inland freight equalisation margin), undermine the spirit of Ogra's statute and regulatory framework.
As already explained in the refineries' joint letter, all the refineries have contractual and commercial agreements with the OMCs for the supply of petroleum products. "With regard to Ogra's statutory responsibilities, functions and the corresponding regulatory role, we believe it is essential for Ogra to ensure that the lifting of refineries' products is prioritised before allowing OMCs any deficit imports, in line with Rule 35(g)," they said.
Additionally, Ogra must ensure that only those OMCs commence operations that hold a valid licence and have contractual or commercial arrangements with the local refineries.
"We sincerely appreciate Ogra's initiative to incorporate a "take or pay" clause into our supply agreements with OMCs to address the uplifting issues. However, as already explained, the refineries have binding contracts with OMCs and any such changes can only be incorporated if they are mutually agreed upon by all stakeholders, with a clear implementation mechanism. Ogra must also ensure the enforcement of the overall supply chain arrangement," the refineries said.
"You would agree that refineries are strategic assets of the country and their sustainability and continuity are essential for the prosperity and economic development of Pakistan."
They assured Ogra that all refineries were fully compliant with the provisions of the Ogra Ordinance 2002 as well as rules, regulations, technical standards and directives of the authority in true letter and spirit.
"In light of the above, we request Ogra's proactive role in addressing the local refineries' product uplifting issues on priority to ensure the smooth functioning of the supply chain," they added.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

KSE-100 crosses 126,000 as post-budget optimism drives buying spree
KSE-100 crosses 126,000 as post-budget optimism drives buying spree

Business Recorder

time9 hours ago

  • Business Recorder

KSE-100 crosses 126,000 as post-budget optimism drives buying spree

Buying rally continued at the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 Index crossed the 126,000 amid a gain of nearly 1,700 points during the intra-day trading on Thursday. At 11:25am, the benchmark index was hovering at 126,028.28 level, an increase of 1,675.60 points or 1.35%. Across the board buying was observed in key sectors including automobile assemblers, cement, commercial banks, oil and gas exploration, OMCs and refinery traded in the green. Addressing the post-budget conference, Finance Minister Muhammad Aurangzeb on Wednesday warned that additional revenue measures of up to Rs500 billion would be taken next fiscal year, if enabling amendments and legislation on enforcement were not passed by parliament, adding that all the budget figures were locked with the International Monetary Fund (IMF). Aurangzeb presented the federal budget 2025-26 to the parliament on Tuesday, with a total outlay of Rs17.573 trillion, targeting a GDP growth rate of 4.2% against 2.7 per cent in the outgoing year. On Wednesday, the PSX extended its rally as key indices posted strong gains, fueled by robust investor participation and improved sentiment following the positive announcements in the federal budget. The benchmark KSE-100 Index rose by 2,328 points, or 1.91%, to close at 124,352.68 points, up from 122,024.44 points in the previous session. Internationally, global stocks and the dollar slipped on Thursday as investors assessed a benign U.S. inflation report and the fragile trade truce between Washington and Beijing, while rising tensions in the Middle East and lingering tariff anxiety dampened risk sentiment. Attention in financial markets this week has been focused on the US-China trade talks, which culminated in a framework agreement that would remove Chinese export restrictions on rare earth minerals and allow Chinese students to access US universities. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3% lower in early trading after hitting a three-year high on Wednesday. Japan's Nikkei slipped 0.7%, while U.S. and European stock futures fell. China's blue-chip stock index fell 0.37%, moving off the near three-week top it touched in the previous session. Hong Kong's Hang Seng index was down 0.74%, also inching away from Wednesday's three-month high. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth.

KSE-100 crosses 125,000 as post-budget optimism drives buying spree
KSE-100 crosses 125,000 as post-budget optimism drives buying spree

Business Recorder

time11 hours ago

  • Business Recorder

KSE-100 crosses 125,000 as post-budget optimism drives buying spree

Buying rally continued at the Pakistan Stock Exchange (PSX), as the benchmark KSE-100 Index crossed the 125,000 amid a gain of over 1,100 points during the opening minutes of trading on Thursday. At 9:50am, the benchmark index was hovering at 125,455.34 level, an increase of 1,102.66 points or 0.89%. Across the board buying was observed in key sectors including automobile assemblers, cement, commercial banks, oil and gas exploration, OMCs and refinery traded in the green. Addressing the post-budget conference, Finance Minister Muhammad Aurangzeb on Wednesday warned that additional revenue measures of up to Rs500 billion would be taken next fiscal year, if enabling amendments and legislation on enforcement were not passed by parliament, adding that all the budget figures were locked with the International Monetary Fund (IMF). Aurangzeb presented the federal budget 2025-26 to the parliament on Tuesday, with a total outlay of Rs17.573 trillion, targeting a GDP growth rate of 4.2% against 2.7 per cent in the outgoing year. On Wednesday, the PSX extended its rally as key indices posted strong gains, fueled by robust investor participation and improved sentiment following the positive announcements in the federal budget. The benchmark KSE-100 Index rose by 2,328 points, or 1.91%, to close at 124,352.68 points, up from 122,024.44 points in the previous session. Internationally, global stocks and the dollar slipped on Thursday as investors assessed a benign U.S. inflation report and the fragile trade truce between Washington and Beijing, while rising tensions in the Middle East and lingering tariff anxiety dampened risk sentiment. Attention in financial markets this week has been focused on the US-China trade talks, which culminated in a framework agreement that would remove Chinese export restrictions on rare earth minerals and allow Chinese students to access US universities. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.3% lower in early trading after hitting a three-year high on Wednesday. Japan's Nikkei slipped 0.7%, while U.S. and European stock futures fell. China's blue-chip stock index fell 0.37%, moving off the near three-week top it touched in the previous session. Hong Kong's Hang Seng index was down 0.74%, also inching away from Wednesday's three-month high. Trump's erratic tariff policies have roiled global markets this year, prompting hordes of investors to exit US assets, especially the dollar, as they worried about rising prices and slowing economic growth.

KSE-100 settles at new record high as PSX reacts positively to budget
KSE-100 settles at new record high as PSX reacts positively to budget

Business Recorder

timea day ago

  • Business Recorder

KSE-100 settles at new record high as PSX reacts positively to budget

Investors at the Pakistan Stock Exchange (PSX) rejoiced over the lack of major taxation measures proposed during the budget for fiscal year 2025-26, as the benchmark KSE-100 Index settled at a new record high of 124,352.68 on Wednesday. Bullish momentum persisted throughout the trading session, pushing the KSE-100 to an intra-day high of 124,588.17. At close, the benchmark index settled at 124,352.68, amid an increase of 2,328.24 points or 1.91%. Across-the-board buying momentum was observed in key sectors including automobile assemblers, cement, commercial banks, oil and gas exploration companies, OMCs and power generation. Index-heavy stocks including HUBCO, PSO, WAFI, MARI, OGDC, PPL, POL, HBL, MCB, MEBL and UBL settled in the green. The upswing at PSX comes as the government did not announce any 'major changes on taxation', said Samiullah Tariq, Head of Research at Pak Kuwait Investment Company Limited, told Business Recorder. 'Capital gain dividends are retained at 15%,' he added. In a statement, Prime Minister Shehbaz Sharif expressed satisfaction over the stock market performance. 'The bullish trend in the stock market is an expression of confidence by investors and businessmen in the people-friendly budget,' he said. Finance Minister Muhammad Aurangzeb presented the federal budget 2025-26 to the parliament on Tuesday, with a total outlay of Rs 17.573 trillion, targeting a GDP growth rate of 4.2 per cent against 2.7 per cent in the outgoing year. Aurangzeb termed the budget the start of a strategy to create a competitive economy and economic productivity to increase exports and fundamentally change the economy's DNA. The government has set an inflation target of 7.5% for the next fiscal year. Regarding the fiscal deficit, the government projected a target of 3.9% of the GDP — or Rs5,037 billion — from the outgoing fiscal year's target of 5.9%. The primary surplus is targeted at 2.4% of the GDP against the budgeted 2% in the current fiscal year, which has been revised to 2.2%. Internationally, share markets and the dollar on Wednesday offered a guarded welcome to the latest signs of progress in US-China trade talks, while awaiting more detail of what was decided and whether it would stick for long. Bond investors were also hunkered down for a reading in US inflation that could show the early impact of tariffs on prices, and a Treasury auction that will test demand for the debt. Over in London, negotiators from Washington and Beijing said they had 'agreed a framework on trade' that would be taken back to their leaders. US Commerce Secretary Howard Lutnick added the implementation plan should result in restrictions on rare earths and magnets being resolved, but again offered no specifics. The law was another hurdle as a federal appeals court allowed President Donald Trump's most sweeping tariffs to remain in effect on Tuesday while it reviews a lower court decision blocking them. Investors, who have been badly burned by trade turmoil before, offered a cautious response and MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%. Japan's Nikkei added 0.4% and Australian stocks firmed 0.4%.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store