• Reject ‘Take or Pay’ clause, say it benefits refineries at their expense
• Move comes as fuel prices expected to see major cut this weekend
• Under new rule, OMCs must buy assigned fuel quotas from refineries or pay penalties
• Clause aimed at reducing imports, protecting local refining capacity

ISLAMABAD: Indicating a substantial cut in prices of petroleum prices by this weekend, the oil marketing companies (OMCs) have opposed the forced signing of ‘Take or Pay’ agreements with local refineries, arguing that the clause would unfairly burden them with financial risks.

The dispute comes amid reports that price of petrol could decrease by Rs12 per litre and of high-speed diesel (HSD) by Rs8 per litre, as estimated by Tariq Wazir Ali, chairman of the Oil Marketing Association of Pakistan (OMAP) — a body representing two dozen smaller and medium-sized OMCs.

OMAP has formally opposed the new ‘Take or Pay’ clause proposed by the Oil and Gas Regulatory Authority (Ogra), under which OMCs would be required to either lift their allocated petroleum product quotas from local refineries or pay penalties for failing to do so.

“In such a situation, it is unreasonable to expect OMCs to bear inventory losses while refineries remain insulated from the market’s volatility,” Mr Ali said in a letter to the chairman and members of Ogra, and the petroleum division.

He argued that the new arrangement would shift the entire burden of market price........

© Dawn Business