March 18, 2006	Saturday	Safar 17, 1427

KARACHI, March 17: The National Accountability Bureau (NAB), initiating a probe into fixation of oil prices, has asked the Oil Companies Advisory Committee (OCAC) to provide information, data and documents to its Sindh chapter by March 20.

The NAB Islamabad Office has directed the OCAC secretary general, Abid Saeed Ibrahim, to provide the relevant information by Monday next.

The information required by the NAB includes: a break-up with detailed calculation of ex-factory prices fixed fortnightly and announced by the OCAC for all the POL productsj during July 2001 to February 2006.

The Bureau has also sought price incidentals set by the OCAC to arrive at retail price for POL products during the same period.

The OCAC has been asked to provide details on sea freight used to establish import parity for different POL products besides, details of premiums levied/charged, along with relevant Platts Oil magazine for prices of premiums arrived at/worked out.

The NAB has also required OCAC to provide necessary documents work/calculation sheets, bills of entry, invoices etc in this regard.

It may be mentioned here that from July 1, 2001 to March 15, 2006 - price of petrol had been increased by 45 times and decreased by 23 times, while the price remained unchanged for 46 times during the period.

For high speed diesel (HSD) —the price had been enhanced by 42 times against a decrease by 23 times, while the rate held unchanged by 49 times.

However, the neutrality of OCAC, a group of oil marketing companies (OMCs) and refineries, had always remained questionable. It was, however, difficult to believe that groups, with direct business interest in the sector, could act as a neutral authority in fixation of oil prices. Still, the body had been doing the job since July 1, 2001 on a fortnightly basis.

On many occasions, the OCAC, while giving the press release on fortnightly price revision, did not furnish reasons for increasing the domestic POL prices without giving a comparison of Light Arab crude and the finished product prices of current and previous fortnights in world markets, the rupee-dollar parity, and changes in petroleum development levy (PDL) etc.

Despite deregulation of the petroleum sector — the government on many occasions used the price fixation as a tool of political manoeuvring to win support of the masses during elections, referendum etc., by directing the OCAC to keep the price unchanged at a time, when increase was inevitable due to higher Light Arab crude and finished product prices in the world markets.

On this latest development, market analysts believe that the watch-dog body of the government has given a very late call to the strong cartel of the OMCs and refiners as Oil and Gas Regulatory Authority (OGRA) has taken over the assignment of fixing oil prices, possibly from the middle of April, 2006. The OCAC has only two last fortnights to fix the oil prices.

Observers, however, feel that it would not be correct to expect much from the NAB that has recently retracted from initiating a probe against the business groups responsible for the worst sugar crisis.

In case the NAB comes out with some serious scam or fraud in oil price fixation, it would be too late to put the OCAC team accountable as the damage had already been done, prices could not be reverted and consumers not compensated.

However, in case of OCAC, it is yet to be seen how the cartel handles the NAB probe to justify the price hike.

In a press briefing in the middle of December, 2005, the OCAC officials had claimed that despite increase in oil prices in the international markets - the domestic market rates in Pakistan were 12-30 per cent lower as compared to POL prices in India.

They said that $2.5 billion (Rs153 billion) in investments had been envisaged for 2006-2010 in the refining sector, while Rs12 billion investment planned by the oil marketing companies during the same period.