Fixing responsibility: OGRA, PSO blamed for petrol crisis

PM Nawaz suspends another top PSO official

ISLAMABAD:

As the government scrambled to overcome persisting fuel shortages, the prime minister on Tuesday suspended another top official after an inquiry committee held the Oil and Gas Regulatory Authority (Ogra) and Pakistan State Oil (PSO) responsible for the gruelling crisis.

The move came days after the premier suspended Petroleum Secretary Abid Saeed, Additional Petroleum Secretary Naeem Malik, DG Oil CM Azam and PSO’s acting Managing Director Amjad Janjua.

The prime minister suspended PSO’s deputy managing director finance Sohail Bhatti while chairing a meeting on Tuesday where a two-member inquiry committee presented its initial findings, according to an official handout. It was the second meeting the premier chaired in as many days to find out how an acute petrol shortage snowballed into a crisis and who was responsible for that.

The meeting was told that 19,300 metric tons of petrol was supplied across the country on Tuesday against the average daily demand of 12,000 metric tons. The prime minister asked the petroleum ministry for hourly updates on the fuel supply situation in the country.

He also ordered structural changes to avoid a repeat of such petrol shortages in the future. Sources said there were many flaws in the Ogra structure due to which an increase in global prices was implemented immediately while the benefits of lower fuel prices took time to reach consumers.



The prime minister directed the officials concerned to take measures to empower Ogra and to review if it was feasible to deregulate petrol imports and pricing. At present, petrol imports and pricing are under government control.

Sources said three cabinet members, Shahid Khaqan Abbasi, Khawaja Asif and Ishaq Dar — respectively heading petroleum, water and power and finance ministries — attributed the crisis to various factors, including professional rivalry among top PSO officials.

Although the prime minister’s trusted bureaucrats conveyed to him that the ministers were equally responsible for the situation, Nawaz Sharif only reprimanded them and fixed responsibility of the crisis on Ogra and PSO.

The affairs at PSO

Sources familiar with the committees’ report said that the government was in process to appoint PSO’s permanent managing director after Supreme Court’s ruling of June 12, 2013 in the Khawaja Asif case. In the meanwhile, the government appointed Amjad Janjua as acting MD.

The report said the PSO in November 2014 published an advertisement, seeking applications for the post of MD. However, two candidates belonging to a rival company of PSO also applied for the post and one of them was about to be hired when the board rejected his name as it saw this as a surreptitious attempt by a rival company to control its huge competitor.

The PSO Board on December 31 re-advertised the post and this time the eligibility criteria supported acting MD Janjua, who also applied for the post. However, the conflict of interest and professional rivalry within the PSO played its role in the fuel shortage, said sources privy to the report.

Other factors, like inventory issue of 20-day stock, receivable amounts for the PSO, thick fog season, annual closure of refineries, huge gap in demand and supply and lack of coordination among petroleum, finance and water and power ministries all contributed to the crisis.

Ogra is responsible to ensure that oil companies have a 20-day stock. The authority, however, failed to enforce regulations on the oil companies. Sources said private companies were reluctant to follow inventory due to a rapid fall in global fuel prices, while PSO’s concerned officials lied about the availability of fuel in the country due to many reasons.

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