Government Accuses OMCs for Artificial Shortage & Illegitimate Profiteering

Amid aggravating petroleum shortage across the country, the government has accused the oil marketing companies (OMCs) and their retailers for creating artificial shortage for profit maximization. In a tweet, Minister for Power and Petroleum Omar Ayub Khan said:

“Some oil marketing companies and retailers for creating artificial shortage of petrol and diesel for illegitimate profits”.

Omar said the government had decided to expose such companies and dealers and take action against them with the help of the regulators and provincial governments. “Their licenses will be cancelled,” the Minister announced & claimed that there was no petroleum shortage in the country.

The Oil & Gas Regulatory Authority (OGRA) on the other hand, issued warnings to all oil companies for apparent collusive and anti-competitive practices in fixing the price of high octane blending component (HOBC) at an artificially higher rate despite massive reduction in prices of regulated products.

Related: PSO to Begin Importing Euro-5 Fuel

However some oil companies have accused the Directorate General of Oil under the Petroleum Division to have mismanaged the situation through knee jerk decisions and changing common decisions by all the stakeholders. They said the government had first cancelled oil imports and changed berthing schedule of some favorite entities.

A statement was also issued by the Petroleum Division which claimed sufficient stocks of petrol and diesel were available in the country and citizen should avoid panic buying. The statement reads:

“Petroleum Division emphatically states that there is sufficient quantity of petrol stocks in the country.”

The Petroleum Division also said that additional production by refineries as well as planned imports were on schedule to meet the monthly needs. It said the country had about 272,000 tons of petrol and 376,000 tons of diesel were available in the stocks — sufficient for 12 days and 17 days respectively — with OMCs, refineries and on port.

However according to Dawn, the official record of the total usable stocks of petrol with all the OMCs put together at the end of Friday at 239,000 tons, showing consumption coverage for eight days. The data sheet also put total diesel stocks at 351,000 toes, showing consumption coverage for five days.

The detailed data, on the other hand, revealed that there was wide gap in product availability across the country and some parts had very tight supply situation while many retail stations were completely shut down. Even these stocks were uneven in different parts within those provinces. Officials privately concede that retail stations of some OMCs had completely dried out.

Related: Petrol Price Further Reduced by Rs 7 per Liter

For example, Punjab had on average petrol stocks (73,000 tones) only for 4 days by Friday night compared to quite healthy stock position (159,000 tones) for 20-day coverage in Sindh. Balochistan and Gilgit-Baltistan had petrol stocks for only 3 days while Khyber Pakhtunkhwa had stocks for 5 days. The OMC’s total petrol stocks in Balochistan stood at 2,000 toes, GB at 440 tons and KPK 12,000 tons.

Likewise, the data sheets also indicate that diesel stocks in Punjab, KP and Gilgit were sufficient only for 4 days each. Punjab’s total stocks stood at 94,000 tons on Friday with average daily consumption for June estimated at 24,000 tons. KP’s total diesel stocks stood at 18,000 tons and Gilgit’s 994 tons – both for 4 days each. Sindh had diesel stocks for 9 days (71,000 tons) and Balochistan had 1,272 tons, enough for 12 days.

The Petroleum Division official named Shell Pakistan and Total Parco that had low stocks, saying:

 “It is unfortunate that some OMCs and/or their dealers have resorted to such methods for profit maximization that is causing shortages/dryouts for the general public and are having an adverse impact on the lives of the esteemed consumers”.

The Petroleum Ministry said appropriate actions were being taken jointly by Petroleum Divi­sion, OGRA, Competition Commis­sion of Pakistan and all relevant stakeholders, including the provincial governments proactively to normalize the situation.

Related: OGRA Takes Notice as Fuel Shortage Worsens

It separately wrote letters to all the chief secretaries to issue instruction to all deputy commissioners to ensure lifting up of petroleum products from depots of OMCs to ensure adequate supply of petrol and diesel and physically check and verify retail outlet wise stocks and share with the federal government.

The provinces have also been asked to take punitive action under Price and Control Prevention of Profiteering and Hoarding Act of 1977 against pumps and dealers involved in creating artificial dryouts.

From Dawn

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