Who is responsible?: Government gave OMCs two years for building oil storages

Now puts blame on OGRA for petrol shortage in Punjab.

ISLAMABAD:

As part of reforms the Pakistan Muslim League-Nawaz (PML-N) government undertook after coming to power in 2013, a two-year time was given to the oil marketing companies (OMCs) that had violated the licensing condition and failed to build storage facilities to keep oil stocks for a minimum 20 days.

Now, in the face of current petrol shortages, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi has put the blame on the Oil and Gas Regulatory Authority (Ogra) for failing to build adequate oil reservoirs despite the fact that the ministry itself had given two years to the OMCs.

However, the oil crisis appears to have been a blessing in disguise for the minister as his blue-eyed boy Arshad Mirza has been appointed petroleum secretary. Apart from this, Shahid Islam, who worked with Abbasi in Pakistan International Airlines earlier, has been appointed managing director of PSO.

“It is surprising that the minister is putting the blame on the regulator,” remarked an official of the petroleum ministry.

“The director general of oil is the regulator of the OMCs and must ensure that adequate storage facilities are put in place by the marketing companies in order to keep oil stocks to meet immediate needs in times of emergency.”

Under the marketing licence, the OMCs are required to establish storages to keep oil stocks for 20 days. During the floods of 2010, Punjab and Balochistan had struggled to deal with acute fuel scarcity due to lack of reserves and consumers were forced to pay as high as Rs200 for a litre of petrol.

Following the deluge, the National Assembly Standing Committee on Petroleum and Natural Resources directed the then DG oil to make efforts and press the OMCs to construct facilities for storing fuel stocks for 20 days.

“Since 2010, no major storages have been built, which is a violation of the OMCs’ licensing condition.”

Officials said DG Oil Muhammad Azam and leading players of the industry were responsible for the current oil shortage in Punjab.

“The DG oil holds product review meetings every month with members of the oil industry regarding supply and demand, however, this time around there seems to be no planning,” an official said.

Pakistan State Oil has 74% of total storage facilities in the country. It had contributed a lot to ease the bottlenecks and ensure a smooth oil supply in 2010 and the responsibility has again fallen on the company in the current conundrum.

To conduct a probe, the government has constituted a committee, but it is silent on the question which senior official met the OMCs and allowed them two years’ time.

According to a senior government official, the present secretary petroleum had relaxed the licencing policy, which required the OMCs to establish facilities for meeting the country’s oil needs for 20 days.

“This question needs to be answered by the probe committee before holding Ogra responsible for the oil shortage,” the official remarked.

Published in The Express Tribune, January 21^st, 2015.

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