Overcharging consumers: ECC body backs proposal to slap fines on oil dealers

OGRA lacks powers to take action against forming a cartel.


Zafar Bhutta October 15, 2014

ISLAMABAD:


A committee constituted by the Economic Coordination Committee (ECC) of the cabinet has backed a proposal that calls for slapping fines and penalties on the oil barons that form a cartel to charge high prices for petroleum products and pocket billions of rupees, officials say.


The move comes following widespread complaints that dealers of oil marketing companies (OMCs) are overcharging consumers without any check.

According to market players, petroleum dealers are selling petrol in the range of Rs106 to Rs111 per litre in far-off areas, especially in southern Punjab including Lodhran and Multan as the OMCs look helpless against the powerful cartel that is making billions by extracting higher prices from consumers.



At present, the Oil and Gas Regulatory Authority (Ogra) only regulates the price of kerosene oil whereas prices of other petroleum products are deregulated. Their rates are set keeping in view the cost of import borne by Pakistan State Oil.

The regulator has not been able to come into action against the oil barons because of failure of the government to amend the Ogra ordinance in order to empower the regulator to monitor the prices of petroleum products.

In February this year, the Cabinet Division pressed the ECC to give the go-ahead for making changes in the Ogra ordinance to equip the regulator with monitoring powers, but the civil bureaucracy and ruling elite scuttled the move.

Finance Secretary Dr Waqar Masood, Science and Technology Minister Zahid Hamid, some other ECC members and top bureaucrats joined hands to block the amendments.



However, according to officials, Finance Minister Ishaq Dar and Petroleum and Natural Resources Minister Shahid Khaqan Abbasi were in favour of making Ogra a powerful regulator.

Considering the concerns raised by different quarters, the ECC decided to constitute a committee headed by the minister of science and technology with secretaries of the ministries of law and justice and finance as well as Ogra as members.

“Now, the committee has given its recommendations to the cabinet,” an official said. “It has endorsed the plan of empowering Ogra to take action against the oil barons and the ECC is likely to take it up in the next meeting.” A penalty clause has been made part of the plan.

According to sources, the government is considering a minimum fine of Rs1 million that will be slapped by the regulator.

In October 2010, the government had allowed major oil companies to set prices of petroleum products except for kerosene oil and curtailed Ogra’s role to being a ‘monitor’ only without any defined powers to tackle price and market manipulation.

Now, a law is being framed that will empower and permit Ogra to impose fines on the OMCs and protect the interest of consumers.

Though Ogra keeps a check on petroleum product prices, it lacks powers and any company or individual can go to court if action is taken against forming a cartel, overpricing and any other market manipulation.

Published in The Express Tribune, October 16th, 2014.

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COMMENTS (1)

asim | 9 years ago | Reply

Oil prices in international markets have fallen below 90 dollars still government announced very less reduction not commensurate with market prices

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