Oil Marketers, Refineries & OGRA Responsible For Fuel Crisis

At the outset of the coronavirus pandemic, fuel consumption across the world dropped sharply as lockdowns were imposed and traveling was banned however, an artificial fuel crisis in Pakistan in June 2020 stopped siphoning off benefits of low international prices to the consumers.

The global oil prices slumped to historic low levels owing to the dearth in demand.

In response to the cut in international prices, the per liter rate of petrol was also revised in Pakistan and it came down to Rs 74 for the quantity.

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However, an artificial fuel crisis was created in the country as the Pakistan State Oil (PSO), as well as private companies, had purchased the commodity in old expensive rates and they were reluctant to sell the commodity at official rates to avoid gigantic losses.

Expensive petrol in June 2020

After the sudden fall in prices, the companies maintained that the reduction was excessive and they refused to bear a loss of Rs 20 per liter.

Therefore, the government kept the petrol price Rs 74.52 per liter to consumers which was produced in oil refineries at a cost of almost Rs 24 per liter.

At the same time, the oil refineries received a tip-off that the government was going to jack up fuel prices in late June 2020.

The government increased the price of petroleum products by Rs 25.58 per liter on June 26, 2020, after which the price of petrol reached Rs 100.10 per liter.

With such a massive increase and hoarding, the oil companies earned a mammoth profit of Rs 5.5 billion.

Inquiry commission pinpointed responsible

A four-member ministerial committee, headed by Federal Minister for Planning and Special Initiatives Asad Umar prepared its report on oil crisis in March 2020.

For forensic investigation of the facts, the Federal Investigation Agency (FIA) was given three months period.

In the meantime, Special Assistant to Prime Minister on Petroleum Nadeem Babar and Petroleum Ministry Secretary Hayauddin were removed from their posts for 90 days.

According to the commission’s report, the petrol crisis in the country in June 2020 was artificial and it was created as the commodity was stashed.

The commission termed OGRA, petroleum division, and oil marketing companies responsible for the crisis.

It also recommended taking action against the oil director general (DG), petroleum division secretary, and another ministry’s official, Imran Abro.

The report said despite the government’s ban on oil imports, some companies imported and stockpiled oil until the prices of petroleum products went up.

It added around 90% of the country’s oil marketing companies did not maintain stocks of at least 20 days which was a requirement.

The oil companies in the country flouted rules and regulations related to supply and OGRA displayed criminal negligence in the whole matter.

The petroleum division did not establish a monitoring cell and failed to retrieve daily and monthly data of available stocks from oil companies.

The report also said the consumers were kept deprived of benefitting from the historic decline in the global oil prices.

The commission also pointed out mushrooming illegal fuel stations across Pakistan on a massive scale and OGRA’s failure to stop illegitimate practice.