OGRA consistently fails to settle forex losses adjustment: OPMAP

ISLAMABAD-Oil Marketing Association of Pakistan (OPMAP) has said that Oil Gas Regulatory Authority (OGRA) has consistently failed to settle foreign exchange losses adjustment and alleged that the regulator has allowed foreign exchange (FX) compensation to companies which did not even import any oil cargos.

In a letter to chairman OGRA, Oil Marketing Association of Pakistan has said that serious flaws were pointed out in the mechanism in FX compensation due to which the exchange losses due to industry have not been compensated. The reference is made to the meeting organized by OGRA held on 21st March 2023 to discuss the Mechanism of Exchange Rate Adjustment, the letter available with The Nation said. The agenda of the meeting was to discuss regarding unfair and unjustified working distribution of FX losses. As you know, after the presentations, in the QA session, the industry pointed out very clearly that the entire industry barring PSO is facing existential crisis and this is mainly driven by the lack of a coherent policy by OGRA, OMAP alleged. It was specified that in a regulated environment, it was the duty of OGRA to ensure that the industry gets a level playing field and that the industry has been miserably failed by the regulator. OGRA has consistently failed to settle foreign exchange losses adjustment, negative IFEM, pricing, oil marketing companies margin revision, and other related issues. Your lack of action on these matters is causing great distress to emerging oil marketing companies which are struggling to compete with the established players in the market. Your deliberate negligence towards these demands has been deeply condemned by all oil marketing companies in a recent meeting, and it is clear that this issue needs to be addressed urgently. 

The record is evident that OMAP is repeatedly knocking doors of OGRA and Petroleum Ministry to adopt an efficient mechanism for FX losses disbursement to ensure that each penny of national money goes to the true eligible entities, without any pick choose and ill-intended calculation to fetch fortune for non-entitled entities, the letter further said. Instead, the industry pointed out scenarios whereby OGRA formula has allowed FX compensation to companies which did not even import any cargos. All top companies including multinational players pointed out the serious flaws in the formula and demanded OGRA to fix the formula and ensure a level playing field for the industry except PSO being the benchmark company.  

During the meeting, OMAP strongly suggested the establishment of FAP (Foreign Exchange Adjustment Pool) for justified distribution of FX losses among genuine rightful entities hence baring any unfair unjustified distribution due to favoritism, actual losses in line with the pricing formula are reimbursed to the affected companies and resultant saving to national exchequer, the prime need of the hour.  

The OMCs representatives also registered a serious concern that besides clear-cut instructions given by the Minister of State on Petroleum in very loud words the regulator failed to initiate OMCs margins review, negative IFEM, stock holding cost and had only focused on negating the demands of the industry on exchange losses. 

OGRA refusal to create a level playing field is not only causing huge losses to the OMCs which is an existential threat, a bad name for the current govt being contradictory with their directives and objective to bring ease in doing business and make essential commodities accessible and affordable for the general public. The regulator current role is also seriously closing the doors for new FDIs in the sector and also impacting investor confidence and the ability of the sector to maintain strategic reserves.

It was very unfortunate to observe that on the hidden instruction of the regulator, OMAP, the only legal entity strong voice of emerging OMCs was denied the right to present its complete point of view, in a very derogatory deprecatory way, that seems to be a preplanned intrigue. The role of OGRA is to regulate the oil and gas sector and ensure a level playing field for all players. However, your recent actions seem to suggest a clear bias towards the big players, which is not only unfair but also goes against the very purpose of your organization. As the guardian of this industry, it is your responsibility to ensure that all players, big or small, are treated equally, and there is no favoritism. Your impartiality is critical to ensuring that the interests of all stakeholders are protected and that the industry thrives on innovation and healthy competition.

This kind of partial behavior not only stifles competition and innovation but also creates an unfair advantage for the established players, thereby harming the consumer’s interest. OMAP, being the true representative of emerging OMCs, is deeply troubled by this biased behavior and believe it goes against the very principles of fairness and competition that our society is based on. As a result, new emerging oil marketing companies are being compelled to adopt legal ways to get their rights, which will not only impact the industry negatively but also tarnish the image of OGRA as a fair regulatory authority. 

Therefore, I urge you to reconsider your decisions and policies and work towards creating a level playing field for all players. The new emerging oil marketing companies deserve a fair chance to succeed, and it is your responsibility to ensure that they are not unfairly disadvantaged. We hope you will take appropriate action to address these concerns and work towards creating a level playing field for all players in market.

Article source: https://www.nation.com.pk/25-Mar-2023/ogra-consistently-fails-to-settle-forex-losses-adjustment-opmap