Petrol crisis in June 2020: Ministerial body may submit its report to cabinet today

ISLAMABAD: A four-member ministerial committee, headed by Federal Minister for Planning and Special Initiatives Asad Umar, set up by Prime Minister Imran Khan with the mandate to pinpoint the responsible for petrol crisis in June 2020, has completed its investigation and may submit its report to the federal cabinet, which meets today (Tuesday).

With Shafqat Mehmood, Shireen Mazari and Azam Swati as other members, the ministerial body was constituted to pinpoint those responsible for the petroleum crisis, in the light of a report of the five-member inquiry commission, headed by Abubakar Khuda Baksh, additional director general FIA. The inquiry commission had recommended action against Ogra [Oil and Gas Regulatory Authority], secretary Petroleum Division, director general Oil, and private oil-marketing companies (OMCs). Ogra had challenged the report of the inquiry commission in the court of law. The Petroleum Division had also submitted its apprehensions about the report of the inquiry commission, headed by an additional DG FIA. The inquiry report had also raised fingers at Special Assistant to the PM on Petroleum Nadeem Babar.

The ministerial committee summoned top mandarins of the Petroleum Division last Friday and on Monday, and asked them multiple questions with regard to stocks of petrol in refineries, OMCs, PSO [Pakistan State Oil] and other related data. Secretary Petroleum Asad Hayaduddin and SAPM on Petroleum Nadeem Babar appeared before the committee and responded to the questions.

Sources said the Petroleum Division submitted its side of the story, saying the inquiry commission left the hoarding companies, who were responsible for the June petrol shortage and tried to scapegoat the Petroleum Division officers. The private OMCs including Shell, GO and HASCOL have been left totally unharmed in the report of the inquiry commission, rather Shell had been given the No 1 company award, whereas it had closed all its depots throughout Pakistan from 1st to 10th June. “They only opened it when the Petroleum Division started action against them,” the Petroleum Division told the 4-member ministerial committee.

GO and HASCOL hoarded 150 million litres of petrol at Kemari and Port Qasim Karachi from May 25 to June 10. They didn’t move a single litre of petrol upcountry whereas there was chaos and riots like situation upcountry. “This has been told to the ministerial committee,” one of the officials at the Petroleum Division said. Moreover, against one of the members of the commission, Gohar Nafees, an asset beyond means inquiry is pending with NAB Lahore.

Interestingly, the same officer sealed at least 345 petrol pumps, which has also been acknowledged as illegal in the report. The illegal sealing and de-sealing inflicted a loss of about Rs500-600 million on these units, as each petrol pump has been charged about Rs2-2.5 million for de-sealing, and the collectors were inspectors of the anticorruption Punjab. This needs a thorough probe. Reportedly, all big storage depots in Karachi also paid cuts for being left unhurt.

Approximately monthly E&P crude production is about 2.5 million barrels approx. Gas about 3.2 BCF daily. LPG about 540 metric tons daily approx. Total shut down from March to June would have cost the country’s E&P sector about Rs226 billion approx, based on working from the DG PC, Sui companies and Ogra. Moreover the refineries total storage capacity for petrol is 90100MT and for diesel is 190000MT. During March particularly, the diesel upliftment halted because of lockdown as most of the intercity transport shut down totally reducing demand to 1/3rd of its routine consumption i.e. when earlier it was 24000MTs daily. Now it was reduced to 8000MT per day.

As a result, the refineries stores topped up and they had to curtail their production to a minimum throughout of almost 1/3rd of the actual capacity. Resultantly, the refineries stopped off-take from E&P fields, whose storages topped up and they had to curtail their production by 1/3rd. Normal production of MOL and Nashpa stood about 20-22000 bpd, but then it was reduced to 7000-8000 bpd.

In case of total shut down, the associated gas would have also gone off production along with LPG, which would have given rise to the gas crisis. The government would have suffered a loss of 75 billion in taxes only. The import rationalisation decision was made on March 25. Hence, it resulted in lower closing stocks in March and subsequently lower opening stocks in April, so practically these lower stocks were the result of that import rationalisation decision.

“Once again, it is reiterated that the import rationalisation decision was made as a result of at least 19 letters we received from all the refineries and the E&P fields and also Pakistan Army to ensure the supply chain to remain intact,” petroleum officials said. It was a well-thought-out decision and even before taking the decision on March 25, the secretary petroleum had also informed Asad Umar, the chairman CCOE in writing about the gravity of the situation on March 18, March 2020. This must be appreciated that this letter saved crucial and very much needed Rs226 billion (US$1.5b) of the E&P sector in oil, gas and LPG. Moreover, about thirty billion rupees have been saved of the refineries. Also, it saved crucial foreign exchange during that period of about $1.5 billion by reducing the not needed imports.