Islamabad, Pakistan – The Competition Commission of Pakistan (CCP) has granted a time-bound exemption for certain clauses within the product supply agreement between Aramco Trading (ATC) Fujairah FZE Ltd and Gas and Oil Pakistan Ltd (GO Petroleum). This arrangement aims to facilitate the import and distribution of gasoline and diesel products within Pakistan. The decision, announced through a press release on Tuesday, underscores the CCP’s commitment to fostering competitive markets while ensuring economic benefits for consumers.
Details of the Agreement and Parties Involved
ATC Fujairah, based in the United Arab Emirates, is a subsidiary of one of the world’s largest integrated energy and chemicals companies. Gas and Oil Pakistan Limited, an Oil Marketing Company (OMC) registered in Pakistan, operates a comprehensive network of retail outlets across the country, selling petrol, diesel, and lubricants.
Under the agreement, ATC Fujairah will supply 100% of the imported gasoline and diesel needed by GO Petroleum’s retail outlets. This arrangement is expected to leverage economies of scale, potentially offering better procurement prices and thereby lowering costs for Pakistani consumers.
CCP’s Review and Conditions for Exemption
The CCP reviewed the agreement under Section 9 of the Competition Act, 2010, which allows for exemptions provided the economic benefits outweigh any anti-competitive effects. The key focus was on ensuring the arrangement would enhance the distribution network and result in tangible benefits for consumers.
The CCP sought detailed information on the following aspects:
- How the arrangement would enhance the distribution network.
- Benefits translating to consumers.
- Status of approvals from relevant regulators for fuel stations, terminals, and storage depots.
- Economic and competitive synergies between GO Petroleum and ATC Fujairah.
Upon review, the CCP granted the exemption with several important conditions:
- Anti-Competitive Activities: Both parties must refrain from engaging in any anti-competitive activities.
- Pricing Terms: The exemption does not cover approval of pricing terms and mechanisms related to the products.
- Regulatory Approvals: Approval for importing and selling any off-specification products must be obtained from the relevant sector regulator. Additionally, approvals for terminals and storage facilities to be used in the execution of this agreement must be ensured.
Economic Impact and Future Monitoring
The CCP emphasized that such exemptions should promote economic progress, improve production and distribution, and ultimately benefit consumers. The synergy between GO Petroleum and ATC Fujairah is anticipated to enhance competition within the market, thereby providing economic advantages that surpass potential anti-competitive risks.
The granted exemption is valid until June 2026. Should the parties wish to extend the exemption beyond this date, they must approach the CCP with updated details and evidence of the benefits realized from the improved distribution network and enhanced market competition.
IN DECEMBER, 2023, ARAMCO ACQUIRES 40% OF GO PAKISTAN FOR $100 MILLION
Saudi Oil giant Aramco formally entered Pakistan’s retail market with an estimated investment of about $100 million by acquiring a 40% stake in Gas & Oil Pakistan Ltd (GO) — a private entity established almost a decade ago.
Conclusion
The conditional exemption granted by the CCP is a strategic move to balance fostering competitive markets with achieving economic efficiencies. By setting clear conditions, the CCP aims to ensure that the benefits of the agreement are maximized for consumers while safeguarding against any potential anti-competitive behaviors.
For more details on this development, please refer to the official press release by the CCP.
