Govt fines OMCs Rs40mln for fuel crisis

OilRefinery OGSCL OGRA

Karachi, 12 June 2020 – Abdul Rehman Chudhary:

The government on Thursday slapped Rs40 million of penalties on six oil marketing companies (OMCs) for their noncompliance with the storage requirements, bringing to an end a month-long blame game after an adverse shortage of petrol and diesel amid corona shutdown in the country.

Shell Pakistan and Total Parco were each fined Rs10 million, while Attock Petroleum, Puma, Gas and Oil Pakistan and Hascol were imposed penalty of Rs5 million each, according to the Oil and Gas Regulatory Authority (Ogra). Three show-cause notices were also issued to OMCs, including Byco and BE Energy.

Ogra said these OMCs were found involved in violation of their licences. They were directed to pay the penalty within a month. OMCs could file review petition only after paying half of the penalty, the regulator said.

The authority warned OMCs of further penalty if they couldn’t improve the supplies at their outlets.

Oil Companies Advisory Council, an informal body representing downstream oil industry, declined to comment on the next line of action.

The Ogra’s decision followed show-cause notices issued on June 3 to the OMCs to explain their position regarding the availability of petroleum products at their retail outlets.

However, their responses were “found unsatisfactory”, according to the letters sent to the OMCs. The authority said OMCs abandoned the regulated activity of marketing by either discontinuation of supplies or provision of insufficient supplies at retail outlets, which also caused serious inconvenience and unrest in the masses, said the letters available with The News. However, OMCs ascribed petrol shortage in the country with the oil import ban imposed in late March due to surplus position of local refineries after the coronavirus-induced lockdown suppressed demand. But, the demand resurged significantly following an ease in lockdown.

“With combined storage capacity of over 500,000 metric tons, OMCs could have stored 2-3 months of the country’s oil supply,” an OMC said in a letter to the Prime Minister aide on petroleum in early April.

The Ogra said the ministry of energy lifted ban on oil imports in the last week of April and OMCs should have arranged or made up any deficit of product during May.

The petroleum division of the energy ministry constituted a committee to probe into the shortage of petrol and diesel.

“The team visited Keamari and Port-Qasim port on 9 June and found more than 40 million litres of petrol at Keamari in the tanks which had not been moved by Hascol Petroleum Limited and Gas and Oil Pakistan Limited,” a spokesperson of the ministry said.

Considering the petrol consumption pattern of June last year (617,895 metric tons), supplies of 846,500 metric tons have been arranged for the current month, the spokesperson said. Useable stocks as of June 10 stood at 228,637 metric tons.