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June 6, 2020

OMCs blamed for artificial shortage of petroleum products

Top Story

June 6, 2020

ISLAMABAD: Government has failed to check cartel of oil marketing companies (OMCs) that artificially created shortage of petroleum products in the country and hijacked the energy security, sources said on Friday.

The petroleum division said there is sufficient stock available in the country. Around 272,500 metric tons of petrol (sufficient for 12 days) and another 376,000 metric tons of high speed diesel that can meet the country’s demand for 17 days is available. But the OMCs and dealers have created artificial shortage and stopped selling the products to maximize their profits, it said.

The petroleum division said it is “cognizant of the artificial shortage’ that is being created in the country by some OMCs and petrol dealers. “There is sufficient quantity of petrol stocks in the country,” it said. “Additionally, production by refineries and imports are to meet the monthly needs.”

Some OMCs and/or their dealers have resorted to such methods for profit maximisation that is causing shortages/dry-outs for the public and having an adverse impact on the lives of the consumers.

Appropriate actions are taken jointly by the petroleum division, Oil and Gas Regulatory Authority (Ogra), Competition Commission of Pakistan (CCP) and all relevant stakeholders, including the provincial governments to normalise the situation.

The petroleum division is in contact with all OMCs and most OMCs do not have any major shortages. Shell and Total Parco are low on stocks but their additional imports are arriving on 8-10 June after which their stocks will also be replenished.

The ministry also urges the public and petrol dealers to not engage in panic buying. Ogra this week issued show-cause notices to six OMCs and asked them to reply within 24 hours. Officials of Ogra said they have received replies form some while others asked for three-day time to personally appear before the authority. An official said after hearing these companies and meeting all the legal aspects, “we will take action if (they are) found involved in such practices”.

Another official of the petroleum division said hue and cry has been created by the OMCs to compel the government for revising the prices, while the government is not ready for coming under their pressure and would ensure the availability. However, the government is also working and ready to resolve OMCs’ genuine issues, he said.

Ogra spokesman Imran Ghaznavi confirmed with The News that the authority received the replies and “we will take the action what is legally possible”. “Ministry of energy and Ogra are jointly working to ensure availability of these products and also have written to the all chief secretaries that if anyone is found in hoarding then legal action must be taken against them,” Ghaznavi said.

The CCP has also taken notice of the shortage and initiated inquiry into the matter to find whether there are any anti-competitive activities involved. It is worth mentioning that the state-run Pakistan State Oil (PSO) has been found selling the High Octane Blending Component (HOBC) fuel at exorbitant price, for which the OGRA has written to the company to sell it at reasonable price. Other companies are also selling it at much higher price than its cost.

The letter available with The News said that although HOBC is deregulated, yet in the interests of consumers the authority asks OMCs to sell the product are reasonable price. “There seems to be a form of consensus between OMCs to sell HOBC at much higher price,” the letter states.

The authority through the letter requested the PSO [and other OMCs] to “reduce the prices to a reasonable level based on their cost lest the Competition Commission of Pakistan (CCP) takes due notice of such cartelisation.”