OMCs Protest Against ‘Take and Pay’ Clause, Warn of Industry-Wide Disruption

Oil marketing companies (OMCs) have raised serious concerns over the newly proposed ‘take and pay’ clause in sales and purchase agreements (SPAs) with local refineries, stating that it places an unfair financial burden on them while shielding refineries from market risks.

The Oil Marketing Association of Pakistan (OMAP) has formally written to the Oil and Gas Regulatory Authority (OGRA), opposing the clause, which would force OMCs to purchase a fixed quota of petroleum products from local refineries or face financial penalties. The association argues that such a requirement disproportionately impacts smaller OMCs that are already facing financial challenges.

OGRA introduced the clause following complaints from refineries that excessive fuel imports were hurting domestic refining capacity. However, OMAP has warned that this move could strengthen monopolies, reduce market competition, and discourage new entrants in the sector.

Another key concern raised by OMCs is that refineries manipulate supply, withholding stocks when prices are expected to rise and offloading excess inventory when prices drop, forcing OMCs to bear financial losses. The association also pointed out that ongoing cross-border smuggling of petroleum products continues to distort market dynamics.

OMAP has urged OGRA to reconsider the clause, suggesting that regulatory safeguards must be in place to ensure fair market practices. Without such measures, the new policy could disrupt the petroleum supply chain and create further instability in Pakistan’s fuel market.

Meanwhile, petrol prices are expected to drop by Rs12 per litre and high-speed diesel by Rs8 per litre later this week, driven by international market trends and inventory adjustments.