Investigation by inquiry commission: Cabinet asks PD to take action against OMCs

ISLAMABAD: The federal cabinet has directed Petroleum Division to take action against Oil Marketing Companies (OMCs) in the light of a report of Inquiry Commission constituted to investigate the shortage of petroleum products last year, well informed sources told Business Recorder.

These directions were given during ratification of decisions of the Economic Coordination Committee (ECC) of the Cabinet held on March 10, 2021.

On March 16, 2021, during a discussion, some of the cabinet members objected to the increase in margin of OMCs and suggested that the same should not be allowed till the recommendations of the Committee constituted to examine the Petroleum Commission's report are received. Majority of the members argued that if the government was bound by the rule to periodically revise the OMCs’ margins, it could not be linked with the Petroleum Commission's report.

Special Assistant to the Prime Minster on Petroleum, Nadeem Babar informed the forum that in total 66 OMCs were operating under licence, with top 8 OMCs holding 92% of the market share. It was to be examined whether the remaining OMCs were surviving on malpractices, such as smuggling, he added.

The Cabinet directed Petroleum Division to immediately initiate action against the “aberrant” OMCs and fuel stations as well as embark upon the necessary administrative and legal reforms, in light of the recommendations of the Petroleum Commission's report.

The Cabinet took the following decisions: (i) necessary action against OMCs and fuel stations be initiated by the relevant entities; (ii) requisite administrative measures be taken; and (iii) legal reforms/amendments in laws/rules/procedures be initiated and placed before the CCLC.

The Inquiry Commission, headed by Additional Director General Abubakar Khudabakhsh in its report maintained that MoEPD-OGRA have the power to inspect minimum stocks of 20 days by OMCs. The decision about import embargo was controversial.

The Commission report said Byco's Amer Abbasi remained a fugitive (wanted by NAB) for a prolonged period in a “fraud of more than Rs 23 billion” as the company imported refined petroleum products in the “garb” of crude oil and “cheated” the government of a staggering sum, adding that the “racket” is still ongoing with Abbasi having entered a plea bargain with NAB for a payment of a little more than Rs 1 billion. The Commission had recommended that on controversial holding of PRMs non-observance of import quotas by OMCs, inaction on deficient stocks of OMCs, intrusive involvement of OCAC and non-lifting of local refined products by OMCs from refineries, punitive/ departmental action should be taken against the delinquent officers/ officials. It further recommended formulation of a draft of new oil rules, reliable data collection and an analysis mechanism and appointment of professional and qualified individuals. The Commission contended that unlawful operations of private storage companies, unlawful joint ventures and hospitalities among OMCs, non adherence to import and local quota allocated to OMCs in Product Review Meetings (PRMs) are some of the reasons for the petrol crisis. The Commission stated that silence of OGRA on specifying minimum stocks, on development of strategic storage, illegal provisional marketing licences to OMCs were also key factors behind crisis. The Commission had recommended punitive/department action against officials/officers and termination of Ogra.

Copyright Business Recorder, 2021