Mess in oil industry pertains to Ogra rules
RECORDER REPORT
ISLAMABAD: The inquiry commission report on shortage of petroleum product has exposed that much of the mess that abounds in the oil industry pertains to Oil and Gas Regulatory Authority (Ogra) and the related laws/rules.
The inquiry commission report uploaded on the Cabinet Division website revealed that in May and June 2020 witnessed the apathy of certain culprit OMCs which imported oil but hoarded or slowed down the supply to their retail outlets till the government increased the prices on June 26, 2020. The crisis of shortage erupted in Pakistan in the month of June 2020. Sad story of how an opportunity was transformed into a crisis starts in March 2020 with the irrational decision of ‘import cancellation’ by Ministry of Energy and Petroleum Division (MoEPD) spanning over a month whereby the OMCs were asked to cancel their cheap international purchases. Instead of enforcing the OMCs to lift their local quota of purchases from refineries, the MoEPD went for the blanket import ban.
The report noted that the OGRA was never in a position to execute and enforce these rules and constantly shunned away from the very responsibility that had been bestowed upon OGRA through OGRA Ordinance 2002 and Oil Rules 2016.
Having been created in 2002 and given some powers to regulate oil industry in 2006, it took OGRA a long 14 years to even formulate its rules (Pakistan Oil Rules 2016).
The role of this white elephant was not more than a silent spectator before or during the crisis .of shortage of petroleum products. Catalogue of failures of OGRA since 2002 includes dishing out licenses (25 in last 14 years while 32 wait in line) to OMCs without ensuring actual enhancement of storage facilities, zero inspections of relative adherence to minimum stock requirements by OMCs, imposition of ritual fines on OMCs for drying out their retail outlets during the month of June 2020.
The Commission is of the considered opinion that formation of a regulatory body like OGRA, perhaps in line with modern markets of developed countries, was not aligned with the ground realities of Pakistan. As such, the Inquiry Commission strongly recommends dissolution of OGRA through an act of parliament within next 06 months.
The modalities of how the present staff and function of OGRA would be utilized can be made a part of the proposed act. This is a strong recommendation but given the landscape of problems that OGRA has put the oil industry in, no other alternative would be viable.
The Commission recommends strict penal/departmental action against those involved in illegalities, especially in issuance of unlawful provisional marketing licenses/marketing permissions.
This includes the Chairpersons (incumbent and the previous ones) and their associated members (Oil, Gas, Finance) that constitutes the ‘Authority’ under section 3(3) of OGRA Ordinance 2002.
To accurately assess the illegality on part of each person is a matter of further investigation/probe.
Ministry of Energy, Petroleum Division (MoEPD) has not fared much better during the last decade and in the June crises in particular.
The story of MoEPD is also rife with apathy, incompetence flavored with malpractices, and disregard to laws/rules. However, the Commission recommends that, to get out of the present predicament of utter confusion, MoEPD must be empowered to take the matters into its own hands with a consolidated approach. The dire straits of oil industry can only be straightened out with a unified authority.
The Commission strongly recommends departmental/ penal action against the incumbent DG Oil for passing flagrantly illegal orders regarding allocation of import/local quotas.
Strong departmental/penal action is also recommended against Imran All Abro and the other associates who had been maneuvering the unlawful affairs in the Petroleum Division.
Imran Abro is reportedly the king pin in the Petroleum Division and calls the shots on behalf of his superiors. He has been serving in MoEPD for the last 06 years without any legal ground. Under the Rules of Business, a contract employee of private company (Inter State Gas Systems (Pvt. Ltd) under MoEPD) cannot serve on deputation/attachment. All such ‘Stand-out-bad-characters’ must not go unpunished.
The role of Secretary MoEPD cannot be ignored. Apparently, he remained encapsulated in a vacuum, both prior to and during the crisis period. The Commission also recommends a strict action against officials of Department of Explosives (working under MoEPD) found involved in issuance of unlawful forms to retail outlets and storage depots respectively.
Monetary losses forced upon PSO, a state-entity, during the days of shortage must be equitably recovered from the OMCs which creamed off the unlawful profits through hoarding, slowing down or drying out their retail outlets.
The Commission recommends that all such unlawful gains be recovered from OMCs by the federal government as these profits rightfully belonged to the general consumers at large.
The Commission recommends that a monitoring cell must be established in the MoEPD. The cell should collect all relevant data from OMCs (import, local uplifting, daily/monthly sales of OMCs, refinery import/production program etc.). This cell would record data of every aspect of OMCs just like OCAC. Only this data would have legal sanctity and the OMCs could also be held accountable in case of spurious figures. Presently OCAC has a total staff of 12 persons. This cell may operate with twice that number but all data would be directly available to the MoEPD and the government whenever required.
To inspect and examine any premises, facility or installation owned or operated by an OMC or refinery and to conduct enquiry so as to find any infractions or violations, is the responsibility of the Deputy Commissioner (DC). The Commission finds them conspicuously absent from the panorama until forced by the acute shortage of petroleum products in the month of June 2020.
The commission also recommended closing of illegal retail outlets, establishing strategic storage, and transportation with strong recommendation that all other private OMCs develop this automated transportation system. In modern age of digitization, this step would not incorporate much expense. Further, the OMCs may be directed to submit this automated data to the proposed monitoring cell in MoEPD. This would help in process of data verification on monthly/annual basis. More importantly, this initiative would be first important step in curbing smuggling as well as automated gauging system. The Commission strongly recommends that the GoP may settle the impending debt issues of PSO in due time to enable it to adopt modern working ways of a vibrant company. The Commission also recommends that PSO may be 147 Wage directed to take the lead in the aforementioned automation process and complete it within a reasonable time. Once this is done, MoEPD would be in a better position to dictate other OMCs to follow suit.
