By SKM
February 22, 2025
ISLAMABAD: In a positive development, the Oil and Gas Regulatory Authority (OGRA) has asked refineries and oil and marketing companies (OMCs) to sign supply-purchase agreements (SPAs) between them with a binding clause of take or pay so that the issue of short upliftment of POL products of refineries could be resolved once for all.
This has been communicated by the regulator in a letter addressed to CEOs and Managing Directors of oil marketing companies and refineries as well. In the letter, OGRA asked OMCs and Refineries to sign the supply-purchase agreements between them with a binding clause like take or pay and confirm compliance with the provision of an implementation status update within 30 days.
The letter also referred to the meeting held on February 10, 2025, in which it was informed that there is no underlying legally binding contractual agreements signed between refineries and OMCs that ensure the application of the SOPs to prioritize product upliftment of the local refineries and continued supply assurances to the OMCs during resigning price. However, there is a principle that OMCs will first uplift the POL products of refineries, then they will import the finished products to meet the deficit, but some OMCs are not following the law because of the absense of the binding clause in the existing agreements.
And to address this matter and enhance supply chain stability and enhance the reliability of local supplies, all the refineries and OMCs are directed to enter into supply-purchase agreements and incorporate any binding clause like take or pay to ensure both refineries and OMCs honour their commitments resulting in timely uplifting and supply of products.
The industry termed this initiative a landmark development if this is implemented in true letter and spirit. “Though this will ensure that local products are uplifted on time, Industry urged OGRA to take a lead in standardizing agreement for take or pay arrangements instead of passing on the buck to companies.”
Earlier, refineries in their letter written on February 11 to OGRA raised the issue of non-upliftment of the POL products by oil marketing companies (OMCs). Ends
