Petrol shortage: Ministry questions PNSC’s work, wants ECC review

Officials say shipping company is violating government’s orders; causing delay in fuel supply.

ISLAMABAD:

Holding the Pakistan National Shipping Corporation (PNSC) responsible for the petrol shortage that engulfed Punjab and other parts of the country earlier this year, the petroleum ministry has alleged that the entity was utilising carriers of other shipping companies to carry oil for Pakistan State Oil (PSO) – a clear violation of the federal government orders.

The petroleum ministry has now decided to seek the assistance of the economic decision-making body to issue directions to PNSC and get it to abandon the practice, allowing PSO to import oil through a bidding process and ensure a smooth supply of oil.

The Economic Coordination Committee (ECC), in its meeting held on November 22, 2012, had allowed the PNSC to transport oil for PSO subject to the condition that whenever the company has no carrier of its own, it shall issue a no-objection certificate to the prospective importer of cargo.

Accordingly, a contract was signed between PSO and PNSC in 2012 followed by an addendum dated January 8, 2013 for transportation of premier motor gasoline (PMG) and furnace oil.

However, the petroleum ministry has informed the ECC that the state-owned oil company has had issues with PNSC. Due to its inadequate fleet and fewer self-owned vessels, PNSC charters vessels from other shipping companies for transportation of products, which is a clear violation of the guidelines given by the ECC.

Consequently, the petroleum ministry has stated this practice leads to frequent disturbances and operational issues in the supply-chain, due in part to the delayed reporting of PNSC vessels at the respective ports.

“It may be observed that a major reason for the fuel crisis in the country was the late arrival of two PNSC tankers despite timely establishment of Letters of Credits by PSO,” petroleum ministry said.

The ministry added that one particular vessel was loaded on January 12, while its original arrival window in Karachi was January 6-8. It arrived on January 15.

Another vessel was supposed to reach the loading port in Singapore during January 3-5, 2015 that was also delayed and reached on January 15. It subsequently reached Karachi on January 28 instead of January 16.

Looking for a solution

PSO has warned that amid these conditions a similar situation might arise leading to fuel shortages. Therefore, PSO has proposed that the matter should be raised at the ECC level to provide the company the provision to switch to importing petrol and oil on a cost and freight (C&F) basis.

Additionally, the PNSC is involved in a litigation case against PSO on the issue of delayed vessels and demurrage already. The senate standing committee on petroleum, during its meeting held on November 6, 2014, had recommended that the petroleum ministry should revive the policy of oil import on a C&F basis.

Despite repeated attempts, the PNSC did not respond to queries.

Published in The Express Tribune, April 15^th,  2015.

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