A conflict has erupted between local oil refineries and Oil Marketing Companies (OMCs) over a proposed “Take or Pay” clause. OMCs strongly oppose this move, fearing it will lead to liquidity crises, supply disruptions, and market exits. The Oil Marketing Association of Pakistan (OMAP) argues that this clause would favor large players while pushing smaller OMCs toward financial collapse.
Five major oil refineries, including Attock Refinery Limited and National Refinery Limited, have urged the Oil and Gas Regulatory Authority (OGRA) to enforce compliance in oil uplift agreements. They claim that OMCs have repeatedly failed to meet their obligations, disrupting refinery operations. The refineries want a meeting with OMCs to finalise a clause ensuring they prioritize local refinery products over imports. OMCs, however, reject the “Take or Pay” clause as it unfairly burdens them. OMAP Chairman Tariq Wazir Ali warned that the clause would seriously harm smaller OMCs’ financial viability. He pointed out that refineries often manipulate supply, responding to price changes in ways that hurt OMCs.
Instead of the proposed clause, OMAP suggests a “Take & Pay” model, allowing OMCs to buy fuel based on market demand. They also call for addressing issues such as fuel smuggling and unfair pricing practices. The upcoming meeting between refineries and OMCs will be crucial in shaping the future of Pakistan’s oil industry regulatory framework.