By SKM
March 4, 2025
ISLAMABAD: The country’s five refineries have asked OGRA to summon a joint meeting refineries and oil marketing companies (OMCs) to deliberate and agree on ‘take or pay’ binding clause in the sales purchase agreements (SPAs) for the smooth uplifting of the local products.
In a joint letter signed by the Managing Directors (MDs) of Pak-Arab Refinery Company Limited (PARCO), Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), Cnergyico PK Limited (CPL) and Attock Refinery Limited (ARL) written on February 27, 2025 to the regulator emphasized that all refineries have legal contractual agreements with oil marketing companies to whom they supply POL products which cover supply and commercial agreements. While appreciating OGRA’s suggestion for amending supply agreements with OMCs to incorporate a binding clause ‘take or Pay’ to address uplifting issues, refineries said: “It is important to highlight that all such changes can only be incorporated in the supply agreements if these are mutually agreed by all stakeholders through a clear implementation mechanism and its enforcement is monitored and ensured by OGRA.”
In the letter also available with the Exclusivewaves.com.pk, they mentioned that it is not the responsibility of the refineries to ensure the applications of SOPs (slandered operating procedures) to prioritize local production irrespective of the increasing or declining price trend. Refineries stressed that OGRA as a regulator and the supply/demand coordinator needs to ensure application of its rules and SOPs.
Referring to the meeting held on February 10,2025, the letter mentioned that all the refineries in that meeting had raised their serious concerns regarding challenges in product off-take resulting from the failure of OMCs to uplift the committed quantities of HSD and Mogas as agreed in the product review meeting. The refineries had also OGRA to direct OMCs to uplift the committed quantities of POL products from the local refineries being essential for the smooth refineries’ operations and only actual deficit volumes to be imported as has been clearly stipulated under Rule 35 (g) of Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016 (the Rules), which is the premise under which they have been granted the license and undertaking to this effect, shall already have been submitted by all OMCs prior to grant of license.
Refineries in their letter opined that OGRA must ensure that local POL product is prioritized for upliftment, before allowing any deficit imports as clearly stipulated in Rule 35(g).
It is pertinent to mention that OGRA on February 20, 2025 it is letter 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.
OGRA had also asked OMCs and Refineries to sign the supply-purchase agreements between them with a binding clause and confirm compliance with the provision of an implementation status update within 30 days. Ends
