OMCs pin 2020 petroleum crisis on energy ministry

Our Correspondent
Sunday, Oct 10, 2021

LAHORE: Oil marketing companies (OMCs) on Saturday turned down allegations of causing shortage of petroleum products in 2020, holding Ministry of Energy responsible for the crisis.

Tariq Wazir Ali, Chairman Oil Marketing Association of Pakistan (OMAP), in a statement, raised graved concern over what he called economic murder and continuous harassment by investigative agencies including Federal Investigation Agency (FIA), Oil and Gas Regulatory Authority (OGRA), and others.

“Since June 2020, there have been FIA raids, inquiries, FIRs against CEOs of OMCs, flawed inquiries with either members having conflict of interest or members with no technical knowledge of the industry who were hell-bent on shifting the blame away from the Ministry of Energy to OMCs, an easy target to gain public sympathy,” Ali said.

He said when the world markets crashed and the oil prices came down to less than $10/bbl, Ministry of Energy - Petroleum Division (MEPD) put an abrupt ban on imports.

When the whole world was buying petrol and diesel and filling up their tanks, Pakistan was struggling to meet its requirements due to the ban imposed by the then DG Oil, the OMAP chairman said.

He added that despite numerous letters by various members of OMAP, the MEPD did not heed the suggestions and ignored all warnings.

Ali went on to say that when the consumption figures started to come in, the MEPD realised its mistake and by the time the ban was lifted, it was already too late.

Despite great difficulty to procure product, OMCs imported the products and supplied them to its retail outlets, he said adding that unlike commodity shortages (sugar, wheat, etc,) the OMCs immediately addressed the crisis within a few days.

He observed that inquiry after inquiry was riddled with incorrect data, mala fide intention, and a desire to make the OMCs a scapegoat.

He further said after successive attempts and a lot of damage to the industry, Auditor General of Pakistan, having the mandate to only audit government-owned entities, started auditing private OMCs.

“Enquiry after enquiry and fines by OGRA are being followed up with more enquiries with no end in sight,” he said adding, “So far nothing has come out of those enquiries except conveying a negative message to the foreign investors, harassed staff and discontinuation of investment by foreign companies that would rather invest their precious dollars in countries where they are not called mafia”.

He also explained that in a short span of time, with its massive investment on storage sites, the share of OMAP companies comprised 50 percent of the total storage capacity in the country. “It is an interesting but bitter fact that OMAP companies have established 50 percent storage in 15 years with at huge cost due to overall economic situation and have sales share of 20 percent.”

On the contrary, companies enjoying 80 percent sales share managed only 50 percent storage in 70 years that too was built at a very low cost when constructed, Ali added. “Cost of doing business is a predominant factor that

has skyrocketed and badly limits the competitiveness of such companies,” he said.

On behalf of OMAP, Ali urged Prime Minister Imran Khan, Chief Justice of Pakistan, and Chief of Army Staff to intervene into the matter and stop the

continuous harassment of OMCs by investigative agencies.

He also demanded immediate renewal of licences of oil companies waiting to set up storage and retail outlets, an end to witch-hunt against such companies, immediate redressal of their margins to ensure that investors, both local and international, find it attractive to continue as well as expand their businesses, bringing tax structure for OMCs in line with other corporate entities in Pakistan, and stop the aggressive regime of Turnover Tax at 0.75 percent.

Ali also demanded acceptance of their demands on priority basis and measures to check rupee slide against dollar as OMCs were suffering massive foreign exchange losses because of its rapid depreciation.

“The industry has already suffered losses of more than Rs 60 billion and a mechanism must be immediately implemented to address this anomaly.”

He also stressed there was an immediate need to introduce investor-friendly policies to encourage OMCs to invest in outlets to provide quality fuels at the right price and in the right quantity alongside best services.

He said the government was leading the country’s economy in right direction through its policies and the OMC’s fully supported it in every aspect.