The Competition Commission of Pakistan (CCP) has categorically denied that the petroleum dealers are creating artificial shortage in the market through cartelisation. Sources in the CCP told Business Recorder on Tuesday that if a petroleum dealer decides not to sell his stocks in an effort to take advantage of the price that is his business judgement.
There is no bar on exercising normal commercial judgement by any individual company during review of POL prices. Contrary to this, if all the petroleum dealers collectively decide not to buy POL products from the oil marketing companies (OMCs) on the expectation of a price reduction, this would be called "cartelisation" under the Competition Ordinance. In this case, the petroleum dealers are attempting to collectively influence the market price.
Sources said that the CCP has no evidence, substantial material or complaint to prove collusive behaviour by petroleum dealers. The move to collectively stop buying POL products on the expectation of a decrease in prices comes within the purview of "cartelisation".
The CCP has found that the petroleum dealers are not engaged in any kind of cartelisation. The commission has not noticed any kind of abnormal activity as far as collusive behaviour is concerned. They have the right to individually stop purchasing POL products from OMCs, but collectively they are not allowed to do so, according to sources in the CCP.
Sources said that if the concerned regulator ie Ogra files a reference with the CCP on cartelisation by petroleum dealers, this would be enough for the CCP to start investigation against such dealers. But the commission has no evidence or proof on the alleged collusive behaviour by petroleum dealers.
The CCP needs forensic information or credible evidence to prove cartelisation. The launching of investigation on the basis of speculations and rumours without any evidence would be misuse of power by the commission.
The Competition Ordinance 2007 mainly deals with the collusive behaviour of companies. The change in price is not the only concern under the Competition law, but there should be some visible indicators to prove such kind of collusive behaviour or cartelisation. Under the Competition laws, the fixation of price through cartelisation might lead to collusive behaviour of the companies, sources added.
Meanwhile, OMCs and dealers continued blame game for the recent oil shortage in the country. OMCs are of the view that dealers stopped buying oil from OMCs that has resulted in POL shortage in the country. Petrol pumps went dry on Monday in different parts of the country after dealers stopped lifting fuel stocks in anticipation of a drop in prices of petroleum products.
Sources in OMCs said that dealers had maintained the stock of oil till January 31 due to expected reduction in oil prices by government and they did not buy oil products from OMCs. They said that OMCs are still maintaining the stock of petrol for 13 days and diesel 17 days. They noted that there was no problem on the OMCs or refinery side regarding the provision of oil. They said that oil refineries were refining the products as Attock Oil Refinery was refining 100 percent of its capacity and Pak Arab Refinery (Parco) was operating at 75 percent of capacity. They said that dealers had doubled oil purchases from OMCs on Monday and now there was no shortage of oil in the country.
When contacted, All Pakistan Petroleum Dealers Association Chairman Abdul Sami Khan held OMCs responsible for oil shortage in the country and said that OMCs had refused to provide oil to dealers on February 1 that resulted in shortage. He said that OMCs had also stopped providing oil due to hike in their margins.
The government had capped the margins of OMCs and dealers ranging between $45-80 per barrel crude. In the previous oil pricing formula, there was upper cap at $100 per barrel and there was no lower cap. Now, the margins of OMCs have increased from 78 paisa per litre to Rs 1.08 per litre on petrol, 80 paisa per litre to Rs 1.27 per litre on HOBC, Rs 1.07 per litre to Rs 1.38 per litre on kerosene oil and 99 paisa per litre to Rs 1.32 per litre light diesel oil. He said that OMCs had stopped providing oil to dealers in view of higher margin of petroleum products.
He requested the government that it should bind the OMCs to provide oil from first of every month after the revision of oil pricing and if it was not done, he warned, the oil shortage would threaten the country again next month.