Who should be held responsible for unabated smuggling of Iranian oil products into Pakistan?

In my earlier blogs I had raised concerns about influx of huge quantities of Iranian oil products into Pakistan. Lately, the oil marketing companies have accused Oil & Gas Regulatory Authority (OGRA) for the unabated influx of Iranian products into Pakistan.

The overwhelming perception is that being the regulatory authority entrusted with overseeing the petroleum sector, it is the responsibility of OGRA to take a proactive stance against the smuggling of Iranian petroleum products.

It is also being said that failure of OGRA to control this menace not only undermines the integrity of the regulatory, but also jeopardizes the national economy.

OMCs working under the legal ambient are already operating on a very thin margin. The smuggling of

Iranian products add to their miseries and make it even harder for them to compete with the vendors of smuggled products.

According to some sector experts, “OGRA is a ‘toothless watchdog’ and its prime duty has been to facilitate the government by raising prices of the petroleum products. It has failed in protecting the interest of consumers.” They add neither the Authority has the mandate nor the resources to curb the smuggling.”

OMCs have the right to ask the Government of Pakistan to take immediate and stringent measures to curb the smuggling of Iranian diesel/petrol.

These include strengthening border controls, enhancing coordination among the law enforcement agencies, and implementing robust monitoring mechanisms.

According to some analysts till recently the smuggled products were sold in Baluchistan Sindh, but now Punjab and even KPK are flooded with Iranian Petroleum products.

 

Pakistan Refinery ready to resume production

Pakistan Refinery (PRL) is ready to resume its production on December 31, 2022 after receiving the cargo of crude oil. The refinery has received 70,000 tons crude oil. PRL had announced a shut down on December 10, 2022 to carry out annual maintenance.

According to sources privy to details, apart from annual maintenance, PRL was not able to carry out production as it was facing problems in opening of letters of credit for the import of crude oil, a must for smooth operations.

Sources said that PRL went for shutdown despite the instructions of the Oil and Gas Regulatory Authority (OGRA) that the refinery should continue with its operations in the month of December.

OGRA wrote a letter to the PRL at the start of the month, after review meeting of supplies of oil in the country.

The PRL representative in the meeting told that the refinery would be shut down because of the issue related to the opening of letters of credit for the import of crude.

Despite PRL’s reluctance, OGRA had directed the refinery to adhere to its directives by not shutting down till February 2023 as it expected shutting down would create oil supply issues in the country.

In response to the PRL letter for shut down, OGRA said that the request of PRL for temporary shutdown has been examined by the OGRA’s Oil Supply Chain Department in the light of current demand-supply trend of POL products.

Keeping in view the high demand of diesel in winter and significant contribution of PRL therein, it said that the PRL was requested to reassess its technical and HSE issue and reschedule the proposed shutdown to the first half of February 2023.

PRL, on the other hand justified the shutdown on the ground that it was already planned. Sources said that apart from carrying out technical annual maintenance work, PRL managed to secure the opening of a letter of credit for crude oil.

Oil marketing companies and refineries have been struggling to open letters of credit due to the extreme scarcity of dollars in the country, despite government policy to give preference to the oil sector for imports to ensure energy security.

PRL received 70,000 tons crude oil and the next cargo would come on January 13, 2023, the sources said.