EDITORIAL: It’s shocking that at least 4,000 MT of smuggled oil still finds its way into Pakistan every day, bleeding the exchequer of a good $36.5 million per month, and the government is unable to do what it takes to end it.
And it’s left to a frustrated Oil Companies Advisory Council (OCAC) to plead with Islamabad once again to “aggressively combat and dismantle this smuggling network, reclaim control of the market, and restore the momentum of the struggling oil industry”.
Clearly, OCAC is very well aware, even if the government is not – or it just doesn’t care – that it will not take too many more feathers to break the oil sector’s back, or the economy’s, for that matter.
And oil smuggling alone has already bloated the black economy, disrupted the entire supply chain of petroleum products and adversely affected refinery health, White Oil Pipeline operations, and especially profitability of Oil Marketing Companies (OMCs).
It’s also constantly hindering local POL production and forcing increased imports, just when the trade balance is a big problem not just for the finance ministry but also in the government’s negotiations with the IMF (International Monetary Fund). It’s also subjecting OMCs to unforeseen exogenous shocks when they are already operating on very fragile margins.
Now the industry is losing business and the government desperately needed revenue from petroleum levy, customs duty, corporate tax, super tax, etc.
Even retail outlets are up in arms, understandably, as they watch their businesses lose sales and revenue, just because nobody can do anything, rather those in charge have decided to do nothing, about oil smuggling even as it strikes a blow right at the heart of the economy. Let’s not forget that all this is also, as OCAC pointed out, harming FDI (foreign direct investment) required for upgradation and modernisation of refineries under the Brownfield Refinery Policy.
So why is this happening? And when will the government wake up? It’s almost laughable that OCAC has had to furnish authorities with a to-do list, reminding it of its duties like “robust enforcement of measures to control the expansion of the illicit sector (border control)” and “declare smuggling a grave crime, categorised as a punishable offence”.
Aren’t these already among the government’s core responsibilities? Should stakeholders, fed up with unnecessary losses in already very turbulent times, have to worry about getting further priced out of the market and also have to tell the government what to do?
Copyright Business Recorder, 2024
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