The Prime Minister has appointed a three member committee to recommend action against those involved in the petrol crises in June 2020.
The Minister for Planning and Development Asad Umar, Education Minister Shafqat Mehmood and the Minister for Human Rights Shireen Mazari are members of the Federal Cabinet’s committee.
These members will recommend action against those who were declared responsible for creating the oil shortage in June. Nadeem Babar, Special Assistant to Prime Minister for Energy Petroleum explained reasons for the crisis during the cabinet meeting.
Ministers including Faisal Vawda and Ali Zaidi were vocal against those who were responsible for the crises. They asked why oil was not being imported when oil was traded at the lowest price in the international market.
Earlier on Monday, the Petroleum Commission, which was formed in July to probe oil shortage in the country, submitted its report to the Prime Minister. The report recommended show cause notices to be served to government officials, and the delegation of authority of checking stocks of oil companies to Oil and Gas Regulatory Authority (OGRA), sources informed The Correspondent.
Sources privy to the matter have said that recommendations in the report may include show cause notices to Secretary Petroleum Mian Asad Hayaud Din, Additional Secretary Muhammed Ayub Choudhry, and DG Oil Dr Shafi-ur-Rehman Afridi.
The source said that after the massive decline in oil prices in March and April this year, due to COVID-19 putting economic activities at a standstill, the government was forced to decrease the petroleum prices substantially in May and June. However, after anticipating increase in global oil prices in July, Oil Marketing Companies (OMCs) started hoarding. This created shortage of petrol and diesel in the country, with Northern areas being the worst affected.
The Lahore High Court (LHC), in July, directed the government to form a high-level commission to hold an inquiry into the fuel shortage across the country. On the directions of the LHC, the Prime Minister constituted a commission headed by Additional Director General of the Federal Investigation Agency (FIA), Abu-Bakr Khuda Bux. The Commission comprised the Director General (DG) of the Anti-Corruption Establishment of Punjab, former DG Oil and Petroleum Division Rashid Farooq, and the Chief Executive Officer of the Petroleum Institute, Pakistan, Asim Murtaza.
“Despite knowing the market scenario, the high-ups of Petroleum Ministry did not take prompt action against the OMCs and dealers responsible for the shortage of petrol in the country,” the source said.
The role of Oil & Gas Regulatory Authority (OGRA) is also being questioned in the report, the source added, regarding its lack of action apart from imposing penalties worth Rs 40 million on the OMCs that made billions out of the crisis.
In the report, it is also recommended that OGRA be more empowered, with more resources at its disposal, so it can take prompt action against malpractices in the market.
“Right now, OGRA just has to ensure that OMCs have shortage capacity as per the requirement. Meanwhile, checking the oil stocks is the sole responsibility of Ministry of Petroleum, which does not make sense,” the source observed.
OGRA, in its findings, held six major oil marketing companies (OMCs) responsible for petroleum shortage across the country, and imposed a cumulative fine of Rs 40 million on them. The authority also issued fresh show-cause notices to Askar Petroleum, Byco Petroleum, and BE Energy for similar violations of rules and licence conditions, resulting in petroleum shortage. It imposed a fine of Rs 10 million each on Shell Pakistan, and Total Parco Pakistan Limited (TPPL). The regulator also imposed Rs 5 million fine each on Puma Energy, Gas and Oil Pakistan, and Hascol Petroleum.
The preliminary report on the petrol crisis showed that during the petrol crisis period from 1-10 June, 2020, as compared to May 2020, the market share of government-owned Pakistan State Oil (PSO) increased from 32-35.7 percent to 54 percent. Whereas, the three private companies, against whom cases had been filed, had a large piece of the market share which declined during the petroleum shortages.
The investigation committee has found variations in market shares of the OMCs during that period. Shell Pakistan Ltd (SPL)’s share dropped to 6.1 percent in the first 10 days of June as compared to May, when it was recorded at 10.2 percent. The share of TPPL dropped from 13.8 percent in May to 10.2 percent in June. The share of APL dropped from 9.0 percent to 6.7 percent in the corresponding period. The share of AOSPL dropped from 0.5 percent to 0.1 percent. The share of BYCO dropped from 3.6 percent to 2.2 percent, while BE’s share dropped from 2.3 percent to 0.2 percent. ANPPL’s share dropped from 0.2 percent to 0.1 percent, OILCO share dropped from 0.2 percent to 0.1 percent, and OILCO and LAGUARDIA’s share dropped from 0.1 percent to to zero percent.