FeaturedNationalVOLUME 16 ISSUE # 10

A high-octane report

An inquiry commission set up by the cabinet to determine reasons behind the June 2020 petrol crisis has blamed institutions and individuals for inaction or collusion. Though the oil marketing companies were mainly responsible for the shortages, the government cannot absolve itself of the fleecing and misery of the common man. The report should also serve as a guideline to the government to save people from being plundered by individuals and national and international organizations in future.

The findings of the commission expose weaknesses of the oil supply chain and the role of the petroleum ministry, the Oil and Gas Regulator Authority (OGRA), oil marketing companies and filling stations in fuel shortages which continued for almost a month. Besides paying hefty prices, people had to wait at filling stations for hours for a few litres of petrol at a time when the Covid-19 pandemic was at its peak. The inquiry commission also proposes the dissolution of the OGRA, the regulator, and action against oil companies and Petroleum Division officials. It is obvious that the OGRA failed to regulate the market while oil companies and refineries made the most of the public misery.

According to the inquiry report, one of the reasons behind the crisis was a lack of coordination among the departments working under the Petroleum Division. The oil marketing companies (OMCs) were primarily responsible for the shortage of the fuel as they deliberately stopped supplies to filling stations despite huge stocks at their disposal. The OMCs were estimated to have minted Rs6 to Rs8 billion by flouting laws. “The prices of petrol were cut on May 31 and the new price was set at Rs74.52/liter in view of lowering oil prices in the international market. As the OMCs would incur a substantial inventory loss by free sale in June, they took the easy way out to simply slow down or dry out supplies, against all legal and moral norms. Consequently, the shortage of petrol began across Pakistan and the filling stations gradually became dry, denying the public at large to reap the benefit of the substantial price cut,” the report noted.

It is obvious that the oil marketing companies violated licence conditions to curtail supplies. The filling stations also refused to sell fuel to customers to maximise their profits. “All OMCs (other than the Pakistan State Oil (PSO) and Shell) proportionally held on to their stocks with knowledge of anticipated rise in prices. It proved during the ground checking of filling stations and records submitted by the OMCs with affidavits,” the report said. During the peak of the crisis, the oil companies showed sales on paper but the ground checking of filling stations across the Punjab proved that they were not supplying fuel in required quantities. It is clear that all OMCs had a fairly good idea of a price increase of at least Rs20/liter and they illegally hoarded their stocks during the crisis, stripping the public of billions of rupees. The PSO, being a state-owned entity, could not follow the illegal practice. Consequently, its market share in the period of shortage increased by nearly 20pc and it suffered a loss of Rs7-8 billion in the process. 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 Rs8 billion in the first two quarters of 2020.

The ministry of petroleum and the director general (DG) oil also failed to ensure uninterrupted supplies while government institutions working under the Petroleum Division failed to check the stock of the oil marketing companies. The OGRA also played the role of a silent spectator. “The OGRA only issued notices to nine OMCs and fined them a total of Rs50 million. However, the notices were devoid of any authentic/quantified detail and seemed more of a ritual used as a defensive ploy,” the commission observed. The companies conveniently paid a paltry sum of Rs25 million – 45pc of the total fine imposed. The report noted that Dr Shafi-ur-Rehman Afridi, a veterinary physician by training, was appointed the DG Oil, while he had no experience of working in the oil sector.

The commission also highlighted the issue of oil smuggling through the Taftan border in connivance with government agencies. It said Rs240 billion worth oil was smuggled into the country. “The question arises as to how such a huge amount of petrol gets across the Taftan border and further across the country with many agencies working to curb it,” the commission wonders. The report proposed taking harsh measures against the people and institutions responsible for the crisis.

The report points out weaknesses and inertness of the government. Since its installation, the government has only piled misery on the common people and they have reached the conclusion that it has no qualms about overburdening them and leaving them at the mercy of mafias, profiteers and hoarders. Essentials have gone out of the reach of the common man after massive devaluation of the rupee and a persistent hike in electricity and gas tariff. Rising fuel prices are also contributing to it.

Prime Minister Imran Khan says that he is fighting mafias in Pakistan. However, he has failed to provide relief to the people in his rule. Rates of all essentials, food, electricity and gas have doubled. Bad governance and inefficiency have been the main traits of his government. He should have come to power with better preparedness, especially when he already knew he had to face mafias.