A significant drop in petrol price is on the horizon, but behind the relief for consumers lies a crisis in the oil sector. While petrol and diesel prices are poised for a sharp decline, oil marketing companies (OMCs) have raised alarm bells over a regulatory shift that could shake up the industry.
A Welcome Relief
According to the Oil Marketing Association of Pakistan (OMAP), petrol price is likely to fall by Rs. 12 per litre, while high-speed diesel (HSD) may see a reduction of Rs. 8 per litre. if it happens, new prices of petrol and diesel will reach Rs. 243.63 and Rs. 250.64, respectively.
This welcome change is attributed to fluctuations in international oil markets and adjustments in local inventory. For consumers battling inflation, a reduction in fuel costs offers much-needed relief.
Red Flags Over ‘Take and Pay’ Clause
At the heart of the controversy is a proposed ‘take and pay’ clause in the sales and purchase agreements (SPAs) between OMCs and local refineries. This clause, introduced by the Oil and Gas Regulatory Authority (OGRA), mandates that OMCs must purchase their allocated share of petroleum from refineries, regardless of market conditions, or face financial penalties.
OMAP Chairman Tariq Wazir Ali has strongly opposed the move, arguing that it unfairly shifts the financial burden onto OMCs while protecting refineries from market fluctuations. He emphasized that this could severely impact competition, particularly hurting smaller OMCs that may struggle to comply with the rigid purchasing requirements.
The association warns that such a mechanism could result in monopolistic control, benefiting only large refineries and dominant OMCs while sidelining smaller companies. The industry body fears that this could discourage competition, reduce efficiency in the petroleum supply chain, and ultimately lead to higher prices in the long run.
OMAP has called for a reconsideration of the clause to ensure a fair and balanced approach that supports both refineries and OMCs while maintaining a competitive market. Whether the authorities take heed or not remains to be seen—but for now, while consumers celebrate lower fuel costs, the industry itself braces for a turbulent ride.
