Govt upset with oil companies for evading audit: 10 oil marketing companies given three days to ensure audit verification

ISLAMABAD: The government has expressed serious concern over the oil marketing companies (OMC) refusing to cooperate with the audit authorities and dillydallying in getting its record verified, amid the forensic audit of the OMCs underway in the backdrop of June 2020’s country-wide artificial shortage of petrol.

These OMCs include PSO, Shell, Attock Petroleum, Hascol, BYCO, Total PARCO, Gas & Oil (GO), Be Energy, Askar, PUMA, Pakistan Refinery, National Refinery, Attock Refinery and PARCO. While expressing serious concern on evading verification of record by oil marketing companies, the Petroleum Division has directed them to ensure the audit within three days. The audit of all oil refineries and OMCs was initiated to authenticate their record amidst reports of irregularities in taxes, product sourcing and cost of transportation.

In its letter of September 7, 2021, the Petroleum Division directed 25 OMCs and refineries to keep their records, including copies of goods declaration forms, treasury challans, quantity registers and other relevant record readily available for audit and cooperate with the audit teams to be joined by a representative of the Petroleum Division.

Now, due to their non-cooperation, the Petroleum Division had written another letter warning of arising difficulties in the future, as the government is already working on devising policies for refineries and OMCs, official sources said.

In the backdrop of the last year's artificial fuel crisis that rattled the nation, the government has initiated internal auditing the OMCs and refineries records. The Cabinet Committee on Transport and Logistics (CCoTL) directed the Petroleum Division on September 1 2021, to place the issue of deemed duty before the CCoE (Cabinet Committee on Energy) in its next meeting with its annual breakup of duty collected by each refinery and its utilization since its inception.

The DG Oil, Ministry of Energy (Petroleum Div) on September 6, 2021 conveyed the directives to the MDs of six refineries (Pak-Arab Refinery Limited, Byco Petroleum Ltd., Attock Refinery Limited, National Refinery Limited, Pakistan Refinery Limited, ENAR Petroleum Refining Facility Ltd.). It also sought the audit reports of deemed duty conducted by third party or government auditors.

The Petroleum Division in March 2021 had also asked the Auditor General of Pakistan (AGP) to conduct a forensic audit of 10 OMCs for creating countrywide petrol crisis in June 2020. This was done to assess whether any company violated license conditions, hoarded product in anticipation of the price rise, or was involved in any other illegal activity.

A total of 66 OMCs are operating under license, with the top eight holding 92 per cent of the market share. The audit was tasked to find out if local refineries provided the ordered quantities and, if not, why; if they had sufficient stocks when the shortage was claimed, to meet the license conditions imposed by OGRA; if not, what was the shortfall in stocks; how much of this shortfall was caused by ordering and how much by non-delivery; and if there were any instances where an OMC stocked oil in storage tanks but did not supply it to petrol pumps.

The investigation is also looking into if the product had arrived on the outer anchorage, and the vessel was denied berthing due to constraints at the port. Furthermore, if the port had any issues with unloading the commodity and if in absence of any of these issues, the shortages could have been mitigated.