Probe into adulteration, money laundering: FIA mulling lodging FIRs against 7 OMCs

ISLAMABAD: The Federal Investigation Agency (FIA) is to lodge FIRs against up to seven Oil Marketing Companies (OMCs) as some subjects require deeper probe vis-a-vis adulteration and money laundering, well-informed sources told Business Recorder.

This was testified by FIA before the Cabinet, in its meeting held on November 23, 2021, when the CCoE (Cabinet Committee on Energy) decisions were tabled for ratification.

The Additional Director General FIA highlighted that IA was mandated to probe the following issues highlighted in the Final Report by Inquiry Commission: (i) non-maintenance of 20 days mandatory stocks; (ii) failure to ensure lifting from refineries; (iii) failure to implement PRM decisions; (iv) maneuvering of berthing plans of cargos/vessels by Port Authorities & DG Oil etc; (v) fake sales, hoarding & discrepancies of OMCs; (vi) issuance of provisional marketing licences; (vii) illegal business activities of BYCO OMC & refinery; and (viii) adulteration in petroleum products by OMCs and their retail outlets.

The positive outcomes of ongoing inquiries by FIA on petroleum industry: (i) action against illegal petrol pumps (more than 2000 sealed); (ii)(stoppage of illegal grant of OMC licences by Ogra; (iii) increase in regulation resulting in proper uplifting of petroleum products from local refineries. Initiation of Audit of Inland Freight Equalization Margin (2012 to 2020) by Ogra; (iv) growth in sales of state-owned PSO by 36% and leading multinational Shell Petroleum by 28% year on year; (v) better documentation by retail outlets (less dumping, proper tax return and no cross sales by OMCs); (vi) focus on maintaining strategic stock reserves due to regular inspections and increase in day cover across the country; (vii) introduction of automated gauge system by some OMCs; (viii) elimination of role of private non-statutory bodies in controlling critical functions like official statistics and berthing of petroleum vessels at ports (currently being monitored by Ministry of Maritime Affairs) and; (ix) notification of audit by DG Audit of all Oil refineries and 25 leading OMCs relating to taxation and supply.

FIA probe against OMCs: Petroleum sector needs positive signals: Hammad

Petroleum Industry at a glance:

The FY21 showed healthy recovery in the sale of the petroleum products (HSD and MS Petrol) that was on a decline in the preceding FY19 and FY20. Overall sales stood higher by 18 percent compared to the previous year, meaning more tax revenue.

Present Status of Enquiries/Cases - — (i) FIA teams have registered 02 criminal cases (FIR No. 80/2021 & 81/2021 PS FIA ACC Lahore) after concluding enquiries against OMCs, ie, M/s Askar Oil Services (Pvt) Ltd and M/s Fossil Energy (Pvt) Ltd; (ii) allegations of illegal marketing licenses, setting up vast network of illegal petrol pumps, fake sales are being investigated in addition to corruption and money laundering charges ;(iii) a total of 12 individuals have been nominated in the FIRs registered which include Directors of OMCs and officials of Ogra and MoEPD. Furthermore, a total of 05 individuals have been arrested which include Ex-Member Oil Ogra, Ex-Member Gas Ogra, Ex-Director General (Oil), RO (Oil) and CEO/Director of M/s Fossil Energy (Pvt) Ltd; (iv) so far Rs. 1,096,837,605 have been frozen in various accounts of the accused persons. Post Arrest Bail of 5 arrested accused were dismissed by trial court on 17.11.2021 ;(v) a total of 04 accused are on Pre Arrest Bail and next date of hearing is 30.11.2021.

At present, further probe in some matters is partially on hold in consequence of Intra Court Appeals (ICAs) filed by OMCs listed as follows: (i) Hascol Petroleum; (ii) Byco Petroleum; (iii) Puma Energy; (iv) Gas and Oil Pakistan; (v) Attock Petroleum; (vi) Zoom Petroleum; (vii) Exceed Petroleum; (viii) Asker Oil Services; (ix) My Petroleum and; (x) Allied Petroleum; (xi) Fossil Energy; (xii) Quality Oil ;(xiii) Horizon Oil; (xiv) Oil Industries Pvt Ltd; (xv) Zoom Marketing ;(xvi) Dr Shafi ur Rehman (ex-DG Oil) Imran Ali and; (xvii) Abdullah Malik (former Member Oil).

According to the FIA, it plans to lodge FIRs against 05 to 07 OMCs in the Second Phase after decision of ICAs who have been found to have committed glaring criminal commissions and omissions. Relevant officials of OGRA and MoEPD found guilty will be proceeded against while 04 officials have already been arrested. Further course of action will be ascertained during the proceedings of enquiries with the passage of time as some subjects require deeper probe vis-a-vis adulteration and money laundering.

According to Ogra, all of the following actions are also envisaged in OGRA Oil Rules 2016 as well: (i) ensuing stock of 20 days and uplifting of stocks from refineries ownership of product review meetings for import and lifting from local refineries of Petroleum Products; (ii) ownership of Import quota; (iii) ownership of Explosives Department. Punitive action against delinquent companies (fines, revocation of license) and; (iv) enforcement of Terms & Conditions of Provisional Licenses issued to OMCs and monitoring transport standards.

During discussion, a member pointed out that the OMCs which were running legitimate businesses, were also being harassed. He recommended that the companies who are not involved in any wrongdoing should be cleared.

Chairman Ogra, informed that in order to liberalize the oil market, the criterion for obtaining oil marketing licence was lowered, which led to mushrooming of OMCs. There were now two baskets of OMCs, those who are genuine and had made substantial investments, and the other who masquerade as OMCS to hide illegal activities. He assured that the genuine OMCs would be cleared without delay.

Cabinet members also observed that large number of OMCs in Pakistan, in comparison to other regional countries should also be rationalized/penalised especially those that are not genuine.

Copyright Business Recorder, 2021