Govt warns firms that licences may be cancelled

Marketing companies are required to keep stocks of oil products for 20 days.

ISLAMABAD:

As the petrol shortage deepens, the government has given directives to the Ministry of Petroleum and the Oil and Gas Regulatory Authority (Ogra) to cancel licences of those oil marketing companies (OMCs) which have failed to build storages to keep required stocks.

Sources told The Express Tribune that a high-level meeting was held in the president’s office, chaired by Secretary General to the President Salman Farooqui and attended by senior officials of the petroleum ministry. After the meeting, Ogra issued show-cause notices to OMCs, seeking explanation over the shortage of petrol at their retail outlets.

According to the licence terms and conditions, OMCs are bound to develop storages to keep stocks of petrol and other oil products for 20 days. Small OMCs, which have market share of five to six per cent, have not yet built storages to meet the demand of fuel in case of emergency, sources said, adding however big companies – Pakistan State Oil (PSO), Shell and Chevron – had set up required storages.

Earlier on May 25, the petroleum ministry, in a letter, had also pushed Ogra to initiate action against the OMCs which had not built storages.

A senior Ogra official said OMCs had been called and after hearing their points of view, their licences would be cancelled if they had not yet built the storages.

The petrol crisis erupted after Attock Refinery Limited’s (ARL) plant was shut on June 1 for one month for annual maintenance. ARL produces 28,000 tons of petrol per month, meeting 15 per cent demand of the country. On the other hand, a plant of the National Refinery Limited (NRL) is also experiencing technical problems.

The government is currently arranging petrol from Pak-Arab Refinery Company (Parco) and some through imports.

Officials said some parts of Punjab were facing shortage of petrol due to logistic problems. PSO has surplus stock of petrol but logistic hurdles come in the way of transport of petrol from Karachi to Punjab and other areas, they said, adding 30,000 tons of imported petrol was on its way to the Karachi Port and another 50,000 tons would arrive on June 16.

Published in The Express Tribune, June 8^th, 2011.