Fuel crisis team wants heads of two OMCs booked

Committee to assess fortnightly oil prices review plan


​ Our Correspondents June 10, 2020
The committee had received complaints against the two companies. PHOTO: FILE

ISLAMABAD: An energy ministry team on Wednesday sought the registration of cases against heads of two major oil marketing companies (OMCs) for hoarding and black marketing of petrol after inspecting their terminals at Keamari Port.

The fuel crisis committee, led by the oil director general, has submitted an application to the assistant commissioner of the Sub-Division Harbour of Karachi’s West district, seeking the registration of FIRs against heads of the Hascol Petroleum Limited and Gas and Oil Pakistan Limited.

According to the documents available with The Express Tribune, the committee had received complaints against the two companies.

Meanwhile, to review the measures taken to overcome the fuel crisis in the country, Prime Minister Imran Khan presided over a meeting attended by Energy Minister Omar Ayub and Special Assistant to the PM on Petroleum Nadeem Babar among others. Ayub told the premier that the Oil and Gas Regulatory Authority (Ogra) had initiated action against the oil marketing companies (OMCs) involved in the hoarding and black marketing of petrol. The Federal Investigation Agency (FIA) will summon the heads of OMCs to question them.

‘Artificial’ petrol shortage irks federal cabinet

A day earlier, Prime Minister Imran Khan had ordered strict action against those responsible for creating an “artificial” shortage of petrol.

Presiding over a cabinet meeting, he directed the petroleum division and Ogra) to ensure the supply of petrol across the country within 48 to 72 hours.

He instructed the petroleum ministry and Ogra to ensure that every oil marketing company maintained a 21-day stock to meet its licence conditions.

Taking notice of the countrywide petrol shortage at filling stations, the government has already initiated an inquiry against OMCs for their alleged involvement in the fuel crisis and has formed a committee headed by the DG oil. It also comprises representatives of the FIA and the Pakistan State Oil.

These officials are looking into the alleged hoarding and black marketing of petroleum products by the OMCs. They are also verifying the availability of stocks at the depots of the OMCs and their supply to retail outlets.

Ogra has found six mega oil companies involved in the shortage and issued show-cause notices to them.

The cabinet noted that Ogra and the petroleum division had the legal authority to physically enter and inspect oil companies’ storage facilities.

It directed formation of joint raiding teams comprising representatives of the petroleum division, Ogra, FIA and district administrations to inspect petrol depots.

It was decided that anyone found involved in hoarding would face full force of law, including arrest.

In addition, the cabinet decided that any company found not maintaining the mandatory stocks and supply to its outlets would face punitive action including suspension and cancellation of its licence and imposition of heavy fines.

The government had reduced the price of petrol for June on the recommendation of Ogra. However, soon after the decision was made, filling stations ran dry across the country.

The federal government reduced the price of petrol by Rs7.06 per litre for the month of June in line with the dip in global crude oil prices caused by virus-induced lockdowns. Following the notification issued by the finance ministry, the price of petrol has come down from Rs81.58 to Rs74.52 per litre.

The Oil Companies Advisory Council, an independent organisation formed by the refineries, OMCs and a pipeline company, said in a statement that the current stock of petrol was continuously being replenished by the OMCs from supplies through local refineries’ production and regular arrival of vessels carrying imported petrol at the two ports – Karachi Port Trust (KPT) and Port Qasim.

PTI govt reduces petrol price by Rs7.06 for June

It maintained that the current sales of petrol were exceptionally high, a growing by 50%, in the past few weeks because of the easing of the Covid-19 lockdown and that had caused the depletion of stocks).

It added that the sudden increase of 50% in consumption was being met by the industry through additional imports in June and July.

“While there are a few pockets of constrained supplies in some parts of the country, the petroleum division, Ogra, local refineries and OMCs are working round the clock to mitigate the situation.”

Meanwhile, the government constituted a high level committee to review the proposed plan of switching to fortnightly review of oil prices from June 15 as the country reels from a petrol crisis.

Despite government warnings of strict action against oil marketing companies (OMCs) involved in the petrol crisis and two oil firms found involved in black marketing and hoarding of petroleum products, the fuel shortage has persisted.

The Petroleum Division in a summary tabled before the Economic Coordination Committee (ECC) of the cabinet proposed that oil prices be fixed on a fortnightly basis effective from June 15 till at least the first quarter of 2020-21 in order to ensure smooth supply of products. It also proposed that oil prices may be determined on the basis of Platts rates rather than the Pakistan State Oil (PSO) benchmarks.

At present, the government determines the oil prices based on the actual cargo prices of PSO and prices are reviewed on a monthly basis.

PSO had imported three cargoes of petrol and diesel at cheaper rates in the first half of May, which resulted in reducing ex-refinery raet for June prices. The government further reduced the ex-refinery price by Rs11 per litre on petrol, which discouraged OMCs from offloading products in the market, which resulted in short supply and a severe petrol crisis across the country.

Earlier, the Petroleum Division had proposed the ECC to freeze oil prices till June 15 but the economic decision-making body did not agree with the proposal and reduced prices from June 1.

The oil industry said that it had to face heavy inventory losses due to cheaper imports of petroleum products by PSO. Hence, the Petroleum Division once again approached the ECC on Wednesday and proposed taking average Platts rates to determine rates and revise prices on a fortnightly basis in order to rescue the oil industry that would import petroleum products and increase supply to retail outlets. However, the ECC formed a committee to review the proposal and bring the case in the next meeting.

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