Diesel Stocks at OMCs Fall Below 20-Day Requirement

High-speed diesel (HSD) inventories at several oil marketing companies (OMCs) have fallen below the mandatory 20-day stock cover, as companies delay fresh purchases amid expectations of another change in petroleum prices.

 

Industry data shows that 12 of 20 OMCs currently hold HSD stocks below the required level, with some companies carrying only a few days of inventory.

 

The companies below the 20-day benchmark include ZMOPL and Hi-Tech with 16 days of stock, Allied with 11 days, Flow with 10 days, GO with nine days, Hascol and Horizon with eight days, Euro with seven days, Taj with six days, Echo with three days, Vital with two days and My Petroleum with just one day of cover.

 

Meanwhile, eight OMCs remain above the minimum requirement. Wafi has 31 days of stock, followed by BE at 28 days, PSO at 26 days, Parco Gunvor and Jinn at 24 days, Puma at 23 days, Attock at 22 days and Cnergyico at 21 days.

 

Industry officials said the declining inventories were primarily linked to petroleum pricing uncertainty rather than an immediate shortage of HSD.

 

OMCs are reluctant to purchase large volumes at current prices because a subsequent reduction in the regulated price could result in significant inventory losses. Companies that build 20 to 30 days of stocks at prevailing costs risk selling the inventory at lower prices if the pricing formula is changed.

 

The Oil Companies Advisory Council (OCAC) has raised the issue with the petroleum ministry, calling for greater predictability in the petroleum pricing mechanism.

 

Liquidity pressures add to inventory concerns

 

OMCs are also facing liquidity constraints due to delays in the settlement of Price Differential Claims (PDCs) by the Oil and Gas Regulatory Authority (OGRA). The delayed payments have tied up working capital that companies need to finance petroleum inventories.

 

Smaller OMCs are particularly vulnerable as financing costs, unsettled claims and potential inventory losses make it difficult to maintain the required stock levels.

 

Industry representatives warned that continued low inventories, liquidity pressures, delayed PDC settlements and frequent changes in the pricing mechanism could put additional stress on the petroleum supply chain.

 

They said the situation could create a cycle in which expectations of lower prices discourage purchases, reduced procurement pushes inventories lower and declining stocks increase the risk of supply disruptions.