Unending wait: Govt yet to take action in Rs81b oil scam

NAB says it has submitted investigation report.

ISLAMABAD:

The long wait of oil consumers hit by a Rs81 billion scam during the Musharraf regime, which was unearthed by the National Accountability Bureau (NAB), is yet to be over as action against the oil mafia has not been taken so far.

According to documents, NAB discovered irregularities worth Rs81.45 billion in 2006 while conducting a probe in connection with the petroleum product pricing mechanism. But the then government dumped the inquiry report and took no action.

Talking to The Express Tribune, a NAB spokesperson said the government at that time had asked NAB to conduct a fact-finding inquiry into the scandal, after which NAB undertook the probe and submitted a report.

According to officials, a case relating to the scam is also pending in the apex court, which may be taken up in coming days.

NAB investigators noted that the cabinet had decided on June 13, 2001 that the oil industry, through its forum Oil Companies Advisory Committee (OCAC), would set oil prices and the director general oil would monitor and regulate the prices until the formation of a petroleum regulatory authority.

However, they found that none of the DG oil regulated the sale prices and even they had no independent data except for Pakistan Refinery’s date sheets to cross-check and verify the prices.

As a result, the process of fixing prices by OCAC from July 10, 2001 to March 16, 2006 remained non-transparent and dubious, they said.

They also observed that the government established the Oil and Gas Regulatory Authority (Ogra) in 2002 and following the cabinet’s decision, monitoring and regulatory functions relating to oil prices was to be transferred to Ogra, but the Ministry of Petroleum delayed it for more than four years.

Though gas regulation and licensing functions were transferred to Ogra, powers for regulating oil product prices were withheld for four years on the excuse that the regulator had no oil expert in its fold, they said.

According to a decision of the Economic Coordination Committee (ECC) of the cabinet, the pricing formula for motor spirit (petrol) became inapplicable with effect from January 1, 2002 when Arab Gulf prices started appearing on Plats.

The petroleum ministry, while arguing that shifting to Arab Gulf prices would reduce revenues of refineries, decided to extend undue financial benefits to the refineries at the cost of consumers and economy, the investigators said.

This was done without referring the matter to the ECC and its financial impact on account of collusion between the ministry and the oil industry during the period under review worked out to be Rs9.16 billion.

The investigators also noted that the refineries were allowed to collect deemed duty under the guise of tariff protection without a specific legal approval or issuance of an SRO. OCAC benefitted from charging a premium on high-speed diesel, motor spirit and other petroleum products under the guise of white oil premium and its impact was estimated at Rs33.864 billion.

In the case of high-speed diesel, NAB authorities found that the refineries charged a much higher price than the actual import cost and its impact was assessed at Rs4.446 billion. NAB officials found that the industry pocketed billions of rupees on some other heads also.

Published in The Express Tribune, February 19^th, 2014.

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