In a bid to resolve long-standing tensions over petroleum supply, the government is drafting a legally binding framework to regulate agreements between oil marketing companies (OMCs) and local refineries. The initiative is aimed at ensuring compliance in fuel upliftment and reducing dependence on imports, particularly of high-speed diesel (HSD).
According to sources, the proposed plan will include a “take-or-pay” clause that mandates OMCs to lift their allocated share of locally produced fuel as decided in Product Review Meetings (PRMs). If they fail to do so, they will face financial penalties. On the other hand, if refineries fail to supply agreed volumes, they will be required to share their profit margins.
This move comes after months of disputes, with refineries accusing some OMCs of unnecessarily importing HSD despite adequate local stock. The Oil and Gas Regulatory Authority (OGRA) has already set up a committee to mediate and include stakeholders from both sides in the negotiations.
Currently, under existing rules, OMCs are expected to lift local fuel first, with Pakistan State Oil (PSO) having the exclusive right to import HSD from Kuwait Petroleum Corporation when needed. Other companies may import only if shortages continue. However, at least one OMC is reportedly importing HSD despite local availability.
The new framework is intended to ensure better planning and reduce supply disruption. At present, Pakistan holds ample fuel reserves — including 604,000 metric tonnes of HSD, 470,000 metric tonnes of petrol, and 401,000 metric tonnes of furnace oil.