Oil storage licences, renewals under scrutiny
The Federal Investigation Agency (FIA) has launched inquiries into the issuance and renewal of oil storage licences, misreporting and illegal price differential claims (PDCs).
At present, the FIA Karachi Circle is investigating two scams. In a scandal, the role of director general oil of the Petroleum Division is being investigated. In the second case, a former director general explosives of the Ministry of Petroleum is being probed over alleged illegal award of storage licences and their renewal.
Documents available with The Express Tribune revealed that the FIA had served a notice on former DG explosives Ali Khan asking him to present the relevant record.
The probe covers allegations of illegal issuance, renewals, amendments of licences vis-a-vis petroleum and chemical storage terminals in Karachi in a manner that appears to be inconsistent with provisions of the Petroleum Rules, 1937 and the departmental requirements and at the expense of fatal risks and hazards to the general population.
Allegedly, the accused persons namely Muhammad Mubeen Ahmed and Raj Kumar, while working as Deputy Director (BS-18) and Assistant Director (BS-17) respectively at the Department of Explosives, committed these illegal acts in breach of their duties and to extend wrongful favours to terminal operators.
Subsequent findings of the department indicated that these grants/renewals were irregular, unlawful and involved material discrepancies. Under the applicable rules, such licences were liable to be suspended or cancelled.
In this connection, any licences are liable to be cancelled if the premises, when inspected, are not found conforming to the description and conditions mentioned in the licence and if any contravention of petroleum rules are made.
"You are hereby directed to provide a detailed explanation of the questions along with all the supporting documents. Why the licences in question were not suspended and/or cancelled despite findings that they were issued/renewed illegally and in violation of the Petroleum Rules, 1937," the FIA said. "What actions, if any, were taken by you in your capacity as Director General Explosives against the illegally licensed terminals/storages."
In another case, the FIA has found a report that alleges large-scale misreporting, concealment and possible hoarding of petroleum products by an oil marketing company (OMC), with suspected regulatory failures by the Oil and Gas Regulatory Authority (Ogra).
The FIA found significant differences between the actual petroleum stocks and the stocks reported to the Oil Companies Advisory Council (OCAC) during inspections at Karachi terminals. The report claimed that the company had substantially higher physical stocks than what was officially declared. It found a discrepancy of 6,891 metric tons in high-speed diesel. Similarly, the premier motor gasoline (PMG) discrepancy was reported at 8,117 metric tons and high octane blended component discrepancy at 5,010 metric tons. The FIA termed these discrepancies "red flags", indicating alleged hoarding and concealment of petroleum stocks through data manipulation. It alleged that Ogra officials failed to act despite being informed about anomalies and instead attempted to explain them as clerical errors.
The FIA said that the OMC sold imported petroleum products without filing customs duty clearance certificates and before payment of taxes and petroleum levy. The inquiry examined imported cargoes including vessels "PS Hamburg" and "Spruce 2," comparing in-bond and ex-bond documentation to identify discrepancies.
The investigation agency questioned Ogra's verification mechanism for PDCs, saying billions of rupees were disbursed based mainly on documents certified by company auditors without independent verification. The report cited first PDC of Rs2.98 billion and another of Rs7.1 billion.
The FIA concluded that the PDC mechanism itself was flawed because it allowed OMCs to claim compensation on older cheaper stocks while selling at higher market prices. The inquiry findings were based on only eight days of investigation before proceedings were suspended by the Sindh High Court following a petition filed by the OMC. The Petroleum Division did not reply to the request for comment.