Reports Reveal Names of 9 petroleum companies that hoarded petrol in June, made billions

The report further uncovered numerable other failures of OGRA since 2002.

Sudden petrol shortage in June 2020 was intended.

Pakistan went through a sudden petrol shortage in June 2020. A five-member Inquiry Commission headed by the Additional DG FIA, Abubakar Khudabaksh was formed in July 2020 to probe into the sudden defecit. The commission created a report regarding the matter and presented it before the federal cabinet on the 15th of December 2020. 

9 OMCs were involved in creating the June 2020 petrol shortage?

Findings of the Commission

The findings of the commission revealed:

A lack of coordination among the departments working under the Petroleum Division was one of the primary reasons for the shortage. 

The comission discovered that the Oil Marketing Companies (OMCs) deliberately stopped supplying petroleum products to pumps despite having large stocks at their disposal.

The document further revealed that the OMCs made Rs. 6 billion to Rs. 8 billion during the June oil crisis and stated:

OMCs committed every illegality in business as usual, between the 1st of June and the 26th of June 2020.

The commission explained that the prices of MS [petrol] were substantially cut on the 31st of May. The new price was set at Rs. 74.52 per liter as a result of internationally plummeting prices. The report clarified:

The new price would have caused OMCs to incur a substantial inventory loss with a free sale in June, so they let the supplies dry out slowly, against all legal and moral norms.

OMCs made Rs. 6 billion to Rs. 8 billion during the June oil crisis.

The report further uncovered numerable other failures of OGRA since 2002, including but not limited to: 

  • the issuance of licenses to OMCs without proper evaluation of actual storage facilities
  • failing to ensure minimum stock requirements
  • imposing ritual fines on OMCs
  • issuance of unlawful provisional marketing licenses to OMCs
  • lack of any punitive action on illegal joint ventures or joint workings between OMCs
  • inability to put any mechanism for keeping any checks on operations of unlawful private storage companies

The report further stated:

All OMCs (other than the Pakistan State Oil and Shell) proportionally held on to their stocks with knowledge of anticipated rise in prices. This has been proven during a ground check of filling stations and records submitted by the OMCs with affidavits. OMCs showed sales on paper during this time, but ground checking of the filling stations showed that OMCs were short on supply.

The commission’s research also uncovered that all OMCs had a relatively good idea of a price increase of at least Rs. 20 per liter beforehand. Thus, they illegally hoarded their stocks during the crisis, stripping the public at large of billions of rupees.

Clarifying the situation further, the commission highlighted:

PSO’s market share increased only by approximately 48 percent in June because it didn’t get involved in the same illegal practices. This act also pushed PSO towards a loss of Rs. 8 billion. Likewise, Shell, to some extent, also tried to keep pace with the situation and fared much better than other OMCs. Shell also posted a loss of more than Rs. 8 billion in the first two quarters of 2020.

OMCs made Rs. 6 billion to Rs. 8 billion during the June oil crisis.

Moreover, the report stated that the Ministry of Petroleum and the Director General (DG) oil failed to theck on the companies operating under the ministry and failed to ensure an uninterrupted supply of the fuel. The document read:

During the crisis period, the Oil and Gas Regulatory Authority (OGRA), being the regulatory body, remained as numb to the situation as a non-functional entity. OGRA did issue show-cause notices to 9 OMCs and fined them a total of Rs. 50 million. However, the show-cause notices were devoid of authentic/quantified detail and seemed more of a ritual used as a defensive ploy on the part of OGRA.

The report also revealed that the nine companies very conveniently paid a paltry sum of Rs. 25 million – 45 percent of the total fine imposed – and went into review against the penalty. 

The report also highlighted that Dr. Shafi-ur-Rehman Afridi was appointed as the DG oil, even though he had no previous experience of working in the oil sector. Regarding this, the document stated:

The posting of the incumbent as well as the previous DGs Oil were found against the approved criteria/rules. The current DG-Oil Dr. Shafi-ur-Rehman Afridi is a grade-20 officer of the Office Management Group (OMG) and has no previous experience related to DG Oil. This fact reflects gross violation on the part of MoEPD and its non-seriousness to attend to the issues and functioning of the office of the DG Oil that plays a pivotal role in the oil/petroleum industry of Pakistan.

The report also brought to light the issue of oil smuggling through the Taftan border with the apparent connivance of the government agencies. Reportedly, Rs. 240 billion worth of oil was smuggled into the country. The inquiry revealed that this vast quantity was brought in 50,000 liters tankers via road from Iran. The report explained:

The border check-posts are primarily manned by Frontier Corps (South) assisted by Pakistan Customs. It is not possible that these vast tankers can cross the Iran border on any other route on the bare-backs of mules or humans. On condition of non-attribution, sources revealed that the smuggling is carried out in connivance with the government agencies. Once the smuggled goods are inside Pakistani territory, they are further transported to Sindh, Punjab, and KP. The rate of delivery, however, varies with destination.

Oil crisis probe calls for disbanding OGRA.

Suggestion of the Commission

The commission submitted the compiled report to Prime Minister Imran Khan yesterday and recommended strict action against the secretary Petroleum Division, DG Oil, OGRA, and private oil marketing companies (OMCs). The committee said:

Such proliferation of licenses has upped the scale of malpractices, including smuggling and adulteration. We strongly recommend the dissolution of OGRA through an act of parliament within the next six months.

What are your thoughts on this? Please share with us in the comment section below.

  • It would be better to take punitive action against the malpractice followed by some OMC. Bringing reforms and placing a meaningful system to tackle the problem of hoarding would be a suitable solution instead of dissolving a whole regulatory system.

    • No doubt your suggestion is good, but who will implement it? If you check the track record of the current government and our “honest” Prime Minister, what have they done in all the scandals regarding flour, sugar and medicines etc. Same is happening here.

  • آٹا چوری ہو گیا، چینی چوری ہو گئی، پیٹرول کی قیمت سرکاری طور پر اور غیر قانونی طریقے سے بڑھا کر عوام کی جیبوں سے کھربوں روپے ڈکار لیے گئے، دوائیاں مہنگی ہو گئیں، ڈالر کی قیمت تقریبا 60 فیصد بڑھ گئی۔ انڈیا کشمیر چھین کر لے گیا اور ہمارے کنجر کو کتوں سے کھیلنے سے فرصت نہیں۔ پھر بھی اس کے ٹائیگرز کہتے ہیں کہ بندہ بہت ایماندار ہے۔ ایسی ایمانداری کے ٹکڑے ٹکڑے کر کے وہاں گھسا دینے چاہییں جہاں جہاں سے یہ حرام خور اور اس کے بےشرم سپورٹرز نکلے ہیں

  • Featured Content⭐