Post Reply 
 
Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Petroleum products prices: Refineries, OMCs not to charge more than benchmark rate
10-25-2010, 03:50 PM
Post: #1
Petroleum products prices: Refineries, OMCs not to charge more than benchmark rate
ISLAMABAD (October 25, 2010) : The government has disallowed the oil refineries and Oil Marketing Companies (OMCs) to charge prices for petroleum products over and above the 'bench mark price' ie imported price, official sources told Business Recorder. "Refineries and OMCs will determine the price on monthly basis, whereas Ogra will monitor it.

Imported price will be benchmark for prices, and refineries as well as OMCs will not be allowed to charge over set "benchmark price" to protect consumers' interests," sources said.

Giving the background, they said that the Economic Co-ordination Committee (ECC) of the Cabinet in its meeting on July 29, 2010 had constituted a committee, under the chairmanship of Deputy Chairman of Planning Commission (DCPC) with representative each from Ministry of Petroleum, Oil and Gas Regulatory Authority (Ogra) to determine and establish impact of deregulation and frame modalities for deregulation.

Pursuant to ECC decision, a meeting of the committee discussed the issues and, due to some variation in numbers, DCPC directed Ogra and Pakistan State Oil (PSO) to jointly work out accurate impact of deregulation on consumer prices. According to the views expressed by Ogra and PSO, location-wise impact of deregulation of prices of petroleum products was in the range of Rs 1.50 to Rs 3.30 per litre on motor spirit (MS)/petrol and Rs 1.31 to Rs 3.50 per litre on high speed diesel (HSD).

It was proposed that refineries and OMCs may be allowed to fix and announce on monthly basis the ex-refinery and ex-depot sale prices for motor spirit (MS), HOBC, light diesel oil (LDO) and aviation fuels (JP-1) & JP-4/8) on their own, on competitive basis, subject to the conditions that: (i) ex-refinery price of the petroleum products would not be more than the PSO average actual import price(s) of the previous month excluding incidentals/wharfage.

Incidentals and wharfage for calculation of HSD ex-refinery price will also not be applicable (ii) for imported petroleum products, only actual incidental/wharfage incurred, if any, may be included in the calculation of import price; and (iii) in case of non-availability of PSO import price(s), the refineries will fix their ex-refinery price as per existing Import Parity Pricing formula parameters, excluding incidentals/wharfage.

The committee also decided that after deregulation of petroleum products prices, there would be no restriction on the number of storage depots, and OMCs will maintain the depots according to their commercial needs.

The OMCs and dealers' margins on HSD already fixed in absolute terms as Rs 1.35 & Rs 1.50 per litre respectively will continue as per existing practice. The margins for other petroleum products were proposed to be fixed in absolute terms (Rs/litre) assuming crude price at $62.50/bbl based on June 2010 prices proportionately as OMCs margin for MS Rs 1.50/litre, HOBC Rs 1.72/litre, kerosene Rs 1.58/litre & LDO Rs 1.61/litre and dealers' margin MS Rs 1.87/litre & HOBC Rs 2.15/litre.

The committee recommended that Ogra would submit quarterly report on pricing of petroleum products indicating the trend in international market and petroleum product prices announced by OMCs/refineries along with their analysis/findings and suggestions, if any, on regular basis to ECC. All OMCs/refineries will have to submit detailed information to Ogra in this regard.

The committee also proposed that necessary amendments/provisions in Ogra Ordinance to empower Ogra for performing the above function of monitoring the pricing of petroleum products under the deregulated scenario will be made. In the meantime, Ogra may be authorised to perform the above monitoring functions till the process of amendments in the Ordinance is completed.

When the issue came under consideration in the meeting on October 15, 2010 the ECC noted that Ogra Ordinance 2002 in its present form does not allow it to monitor prices of de-regulated petroleum products as it only acts as a regulator. Suitable amendments, therefore, need to be made in the Ordinance to assign Ogra the function of monitoring of deregulated petroleum product prices.

On a query, the ECC was informed that with the introduction of new petroleum products pricing formula, Inland Freight Equalisation Margin (IFEM) will fall in controlled deregulation because the Ogra will notify it from one destination to other destination but so far as prices of petroleum products are concerned, refineries and OMCs will determine the price on monthly basis whereas Ogra will monitor it. Imported price will be benchmark for prices and refineries as well as OMCs will not be allowed to charge over set "benchmark price" to protect consumers' interests.

After detailed discussion, the ECC approved revised petroleum products pricing formula 'deregulation of petroleum products prices by doing away with common freight pool' and directed the Ministry of Petroleum to place the matter before the Cabinet for ratification, subject to amendment in Ogra Ordinance 2002 prior to the implementation of the decision.

The decision will be notified by Ministry of Petroleum and Natural Resources at an appropriate time for implementation by Ogra.
Visit this user's website Find all posts by this user
Quote this message in a reply
Post Reply 


Possibly Related Threads...
Thread: Author Replies: Views: Last Post
  LDA DG Takes Charge: Bund Road Projects Undergo Comprehensive Review with Emphasis on LRE-Azan 0 153 12-30-2023 04:47 PM
Last Post: LRE-Azan
  Projected 7% Reduction in Policy Rate for CY24 LRE-Azan 0 179 11-27-2023 02:13 PM
Last Post: LRE-Azan
  LDA City Lahore Announces Guidelines for 3rd & 4th Ballot | Development Charge Detail LRE-Azan 0 186 11-22-2023 01:05 PM
Last Post: LRE-Azan
  Real Estate Agents in KPK Seeks Government Action on Tax Rate Revisions LRE-Azan 0 288 09-01-2023 07:43 PM
Last Post: LRE-Azan
  Dollar Rate in Pakistan – USD to PKR Open Market Updated Prices (2023) LRE-Azan 0 322 08-31-2023 07:18 PM
Last Post: LRE-Azan
  Ring Road Police take charge today City traffic police resent new authority Salman 0 6,184 01-01-2013 07:04 PM
Last Post: Salman
  Syed Tahir Shahbaz assumes charge as new CDA chairman Salman 0 4,528 10-03-2012 05:53 PM
Last Post: Salman
  Interest rate down by 1.5% Salman 0 4,633 08-11-2012 12:34 PM
Last Post: Salman
  Private sector’s hopes of cut in policy rate diminish Salman 0 3,925 04-14-2012 02:26 PM
Last Post: Salman
  Huge potential for marble products export: Trade missions can fetch billions of dolla Salman 0 4,560 01-05-2012 04:43 PM
Last Post: Salman
  SBP to retain discount rate at 12% Lahore_Real_Estate 0 3,260 12-01-2011 01:39 PM
Last Post: Lahore_Real_Estate
  Petrol pump plots to be auctioned to OMCs: CDA Salman 0 4,237 11-23-2011 01:29 PM
Last Post: Salman
  Expo helps entrepreneurs show products to foreign buyers Salman 0 4,282 10-25-2011 12:22 PM
Last Post: Salman
  New industrial policy aims to sustain growth rate of 8% pa Lahore_Real_Estate 0 4,063 09-06-2011 04:33 PM
Last Post: Lahore_Real_Estate
  OGRA slashes petroleum prices Lahore_Real_Estate 0 2,871 07-01-2011 02:11 PM
Last Post: Lahore_Real_Estate
  Government to issue separate CVT rate for SIE Lahore_Real_Estate 0 3,317 11-27-2010 07:39 PM
Last Post: Lahore_Real_Estate
  Power, petroleum ministries to be merged Lahore_Real_Estate 0 2,869 10-23-2010 12:30 PM
Last Post: Lahore_Real_Estate
  Sales tax under RGST: standard rate proposed Lahore_Real_Estate 0 4,369 10-13-2010 12:48 PM
Last Post: Lahore_Real_Estate
  Anwar assumes charge as CEO Smeda Lahore_Real_Estate 0 3,324 10-13-2010 12:00 PM
Last Post: Lahore_Real_Estate
  Gwadar Corridor Planned for Central Asina States; Oil Refineries to be Installed LRE 1 5,943 10-07-2010 09:37 AM
Last Post: LRE

Forum Jump:


User(s) browsing this thread: 1 Guest(s)