ISLAMABAD: In a positive development, the Oil and Gas Regulatory Authority (Ogra) has asked the refineries and oil 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 the CEOs and managing directors of the OMCs and refineries.
In the letter, the Authority asked the 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.
The letter also referred to a meeting held on February 10, 2025, in which it was informed that there were no underlying legally binding contractual agreements signed between the refineries and OMCs that ensure the application of SOPs to prioritize product upliftment of the local refineries and continued supply assurances to the OMCs during the resigning price. However, there is a principle that the OMCs will first uplift the POL products of refineries, and then they will import the finished products to meet the deficit, but some OMCs are not following the law because of absence of the binding clause in the existing agreements.
To address this matter and enhance the supply chain stability and 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 implemented in letter and spirit.
Though it will ensure that the local products are uplifted on time, the industry urged the Ogra to take a lead in standardizing agreement for take or pay arrangements instead of passing the buck on to the companies.