ISLAMABAD: Ministry of Energy has directed Oil and Gas Regulatory Authority (Ogra) to cancel provisional licence of 36 Oil Marketing Companies (OMCs) for failing to meet the prescribed conditions, well-informed sources told Business Recorder.  

Presently, a total 66 OMCs are operating under licence, with top 8 OMCs holding 92% of the market share.  

 The sources said 36 OMCs that acquired licences but did not build storages as per the agreements and allegedly traded only in Iranian diesel, are being issued final notice for closure.    

However, those OMC which gave commitments to build infrastructure but showed very little progress are being given a one-year deadline to complete their infrastructures, otherwise their licence will also be scraped, the sources added.  

"Very strong worded letters have been sent by Ogra to those OMCs which have not completed their infrastructures as agreed at the time of issuance of licence," the sources maintained.   

In March this year, the Cabinet directed Petroleum Division to immediately initiate action against the aberrant OMCs and fuel stations as well as embark upon the necessary administrative and legal reforms in light of the recommendations of the Petroleum Commission's report. The Cabinet took the following decisions: (i) necessary action against OMCs and fuel stations be initiated by the relevant entities; (ii) requisite administrative measures be taken; and (iii) legal reforms/amendments in laws/rules/procedures be initiated and placed before the CCLC.  

The Inquiry Commission, headed by Additional Director General Abubakar Khudabakhsh, who is now attached to the team investigating the Jahangir Khan Tareen case, reported that MoEPD-Ogra has the power to inspect minimum stocks of 20 days by OMCs. The decision about import embargo was controversial.  

The Commission which conducted an inquiry of the petrol crisis in 2020 had recommended that on controversial holding of PRMs non-observance of import quotas by OMCs, inaction on deficient stocks of OMCs, intrusive involvement of OCAC and non-lifting of local refined products by OMCs from refineries, punitive/departmental action should be taken against the delinquent officers/officials. It further recommended formulation of draft of new oil rules, reliable data collection and an analysis mechanism and appointment of professional and qualified individuals. 

The commission contended that unlawful operations of private storage companies, unlawful joint ventures and hospitalities among OMCs, non-adherence to import and local quota allocated to OMCs in Product Review Meetings (PRMs) are some of the reasons for the petrol crisis. The Commission stated that silence of OGRA on specifying minimum stocks, on development of strategic storage, and illegal provisional marketing licences to OMCs were also key factors behind the crisis. The Commission had recommended punitive/ department action against officials/ officers and termination of OGRA.  

On OMCs, Commission observed violation of licencing conditions, maneuvering of vessels berthing at ports and non-maintenance of 20 days stocks.  

OMCs are involved in underutilizing the import quota, importing petrol in excess of storage capacity, importing petrol despite no retail outlets, disregard for safety protocols, and unlawful interrelated interest of Vitol with different OMCs.  

The Commission recommended recovery of monetary liabilities, Equitable distribution of loss borne by PSO among delinquent OMCs, revitalization of the role of DCs to inspect the stock of OMCs and cancellation of provisional marketing licences and development of strategic storage.   

The Commission has also recommended that all illegal outlets be closed, in addition to punitive action against retail outlets selling smuggled or adulterated products.  

Other recommendations of the Commission were as follows: (i) maintenance of oil piers; (ii) halting of unlawful usage of storage through MoEPD; (iii) construction of pipeline from Keamari to FOTCO, Port Qasim; (iv) elimination of the role of OCAC in berthing, PRMs, IFEMs, data collection.—MUSHTAQ GHUMMAN