OGRA decides to increase Freight rates of Oil Tankers by 9.6%

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The Oil and Gas Regulatory Authority (Ogra) has increased the freight rates for oil tankers by 9.60% on demand of the Oil Tankers Contractors Association (OTCA) which had earlier threatened to call a country-wide strike. The new freight rates will be applicable from August 1, 2020.

The decision to increase the freight rate has been taken in violation of the Ogra Ordinance 2002 as the authority has lacked “quorum” after the retirement of Ogra chairman Uzma Adil. However, in a letter to the Oil Companies Advisory Council and the Overseas Chamber of Commerce and Industry (OICCI) on July 21, the authority stated that on request of OTCA for revision of primary cartage freight rates, it has approved an increase of 9.60% in the prevailing freight for compliance.

The compliance includes the revised cartage slab rates that have been determined and applicable throughout the country excluding special freight areas of Azad Jammu and Kashmir (AJK), Gilgit-Baltistan (G-B) and Balochistan. The revised primary freight rate has been determined at the rate of Rs102.93 per 40 KL vehicle. In case of special freight areas of the AJK, the G-B and Balochistan, the existing rate has also been revised based on the same increase of 9.60%. The secondary freight has been deregulated by the federal government. Accordingly, it is being determined or managed by oil marketing companies (OMCs).The freight rates are to be computed on a direct basis and the authority will go for the revision of freight rates after two years, if required.

On July 18, Federal Minister for Energy Omar Ayub Khan had a meeting with a delegation of OTCA to resolve the issues of oil tankers at the Ministry of Energy-Petroleum Division. Delegation presented its demands in front of concerned departments which were taken up and mediated by the federal minister one-by-one for their expeditious resolution. After extensive deliberations, OTCA called off its strike. Both the parties agreed that OTCA team would also meet member (gas) and member (finance) of Ogra on July 20 to resolve and finalize the issue of freight revision despite the fact that Ogra could not take any decision without proper quorum.