OGRA asks PSO to cancel franchise of expired licence holders

CNG association alleges PSO is demanding illegal payments

Our Correspondent April 19, 2016
PSO has denied charging more than the oil marketing company (OMC) fee prescribed by Ogra. PHOTO: FILE

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has asked Pakistan State Oil (PSO) to either renew expired explosive licences or cancel franchise agreements of compressed natural gas (CNG) stations in order to ensure safety of their premises, PSO said on Tuesday quoting a letter of the regulator.

In a statement, PSO recalled that it had informed Ogra in 2013 and 2014 that some CNG stations at its retail outlets were running without a valid explosive licence and gas supply to them should be immediately cut off until they complied with the law. “However, no action was taken rather PSO was advised to cancel franchise agreements of the filling stations not adhering to the law,” it said.

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PSO also accused some of the CNG station operators of defaulting on payments and breaching an agreement by not paying the oil marketing company its monthly share. As a result, PSO’s outstanding receivables from CNG stations increased to around Rs912 million by the end of March 2016.

According to PSO, the CNG station operators are bound to pay the value of a pre-defined percentage of gas sold every month in line with the terms and conditions of the licence agreement signed between the two sides.

The company denied charging more than the oil marketing company (OMC) fee prescribed by Ogra.

It claimed that CNG sellers had been enjoying all benefits of having their filling stations at retail outlets of PSO, which pays land rentals, NHA and provincial approach road fee, advertisement taxes, professional tax, etc for each outlet. The CNG station operators only pay the franchise fee for the use of PSO’s brand name and space.

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On the other hand, they are receiving payments from PSO against cards, carriage and other businesses and are also enjoying fuel supplies on credit. In order to recover the receivables, PSO acknowledged that it recently made deductions in such payments to the defaulting parties.

Earlier, the All Pakistan CNG Association complained to Ogra that its members having PSO’s franchise were being forced to pay “undue and unlawful amounts”. “PSO has been demanding from its franchise stations over and above Ogra-prescribed OMC fee,” it alleged.

The association further said PSO was blocking renewal of the franchise holders’ explosive licences which was a violation of safety rules, reducing or stopping petroleum supplies and making deduction from advance payments for petroleum products.

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“The CNG franchise holders have decided to seek legal remedy by filing suits for the recovery of the amount illegally deducted by PSO,” said Association Chairman Abid Hayat.

Published in The Express Tribune, April 20th,  2016.

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