Oil marketing companies’ margin enhanced by ECC

The Economic Coordination Committee of the Cabinet (ECC) on Tuesday approved the long standing demand of the oil marketing companies (OMCs) and dealers by increasing their margins on petroleum products. It gave a go ahead to the Liquefied Natural Gas (LNG) policy and allowed resumption of POL supplies from the abandoned depots of Pakistan State Oil (PSO) under the Inland Freight Equalisation Mechanism (IFEM)
An official source said that the meeting deferred the LPG policy and recommendations for the imposition of levy on CNG and LPG and asked the Petroleum Ministry to take consent of the stakeholders. The committee feared that any tax on the profit margin of CNG dealers would push them to start a campaign against the government. The matter of releasing Rs1 billion in advance for the Kamoke Rental Power Plant was also deferred. The committee decided to increase OMCs margin by 0.48 per cent from existing Rs1.50 to Rs1.98 per litre on petrol and by 0.41 per cent from existing Rs1.35 to Rs1.76 per litre on high speed diesel (HSD). Similarly, the dealers margin for petrol increased by 0.5 per cent from Rs1.87 to Rs2.37 per litre and by 0.7 per cent for HSD from Rs1.50 to Rs2.20 per litre. The ECC directed to apply the proposals in three phases to avoid any sudden burden on the consumers.
The committee has approved the Ministry of Petroleum’s proposal to resume supplies from the abandoned depots of PSO in Faqirabad, Kotal Jam, Sahiwal and Shershah under IFEM. Other OMCs will also be allowed IFEM from these locations as and when they open their storages at these locations. The petroleum products storage of these depots has strategic importance and inclusion in IFEM mechanism would help avoid recurrence of product shortage.
The draft of LNG Policy 2011 which is a revision of LNG policy 2006 was presented to the committee and it approved 9 out of 10 proposals in the policy draft. It approved the conditionality of having a long term supply agreement as well as availability of sufficient natural gas reserves for at least 20 years has been replaced with only 5 years. The prior permission of the government for spot purchase of LNG was no longer required. SSGCL and SNGPL will not sell gas priced under the weighted average cost of gas to industries which are selected by the government to use RLNG time to time.
A new clause has been added which requires licensees to furnish a guarantee against their delivery commitment. It has also been provided that in case of failure of the licensee to deliver LNG by stipulated date, its first right to 3rd Party Access will stand waived off. The clause related to involvement of coast guards or any other agency to control activities of entry and exit of shipping traffic and requirement of security escort through coast guards on the expense of LNG developer, LNG Terminal owner/operator and LNG buyer has been abolished. Port authorities have been obligated to convey their decision on acceptance of site within one month of submittal of NOC from Singh Environmental Protection Agency, Quantitative Risk Assessment Study and Navigational Simulation Study.
OGRA’s discretionary rights to grant exemptions from mandatory regulated third party access or negotiated third party access requirements have been eliminated. The project proponents have been allowed to establish a gas storage facility subject to applicable rules and OGRA has been mandated to determine the storage tariff. The committee will take up the tariff rationalisation in the next meeting, giving maximum time for discussion and all stake holders may have sufficient time to come well prepared.