ISLAMABAD: Controversies sparked by the weeklong petrol crisis continued to deepen on Tuesday as the prime minister suspended another senior official of the Pakistan State Oil even though the two-member investigation team he had formed blamed the Oil and Gas Regulatory Authority for a ‘serious failure’.

Officials said the prime minister stopped short of taking action against Ogra because of legal complications, but appeared determined to act against all those found wanting. He is reported to have asked his trusted bureaucrats to complete formalities for a reference against Ogra’s top brass.

On the other hand, Ogra issued formal show-cause notices to the 11 operational oil marketing companies (OMCs) for their failure to maintain mandatory stocks for 20 days that led to petrol shortages. The regulator has the powers to impose penalties or cancel licences of defaulting OMCs.

The Senate chairman has called an emergency joint session of the standing committees of the upper house on finance and revenue, water and power and petroleum and natural resources and summoned the ministers concerned to explain what had led to the crisis.

The petrol situation, meanwhile, did not improve because demand significantly outstripped supplies and furnace oil stocks stood exhausted and imports were likely to arrive on January 25 and 27.

After presiding over a meeting, the prime minister directed the petroleum ministry to submit hourly reports about oil stocks and demand and supply position across the country.

Another senior official of PSO suspended

According to an official statement, the prime minister called for structural changes to prevent recurrence of such a situation. It said the two-member committee comprising Zahid Muzaffar and Zafar Masud presented its initial findings to the prime minister and informed him that “petrol shortage was a serious failure on the part of Ogra as a regulator”. The meeting endorsed the earlier decision of suspending four senior officials responsible for the crisis and decided that PSO’s deputy managing director Sohail Butt was equally responsible and ordered his suspension.

Sources said the Ogra act provided job protection to members and chairman of the regulator. The prime minister, through the cabinet secretary, could forward a reference to the Federal Public Service Commission on specific allegations of misconduct and send them on leave till completion of an inquiry by the FPSC.

They said the government could use previous complaints filed by some lawyers against Ogra bosses before the cabinet division. Ogra officials privately suggest they could not be proceeded against on the basis of an inquiry by some advisers not protected under the rules of business or Estacode.

Officials said the prime minister was informed that notwithstanding extraordinary sales of 40,000 tons on Jan 1, 20,000 tons the following day and 22,000 tons on Jan 3, the major reasons behind PSO’s inability to arrange more supplies was non-availability of funds to open the letter of credit (LC).

As the PSO’s supplies dried up, other companies could not sustain pressure. The prime minister was informed that a vessel carrying 22,000 tons of petrol for Shell was now discharging the product at Karachi while another vessel of Hescol carrying 32,000 tons of petrol would reach port on Jan 24, followed by two vessels of 60,000 tons and 50,000 tons belonging to PSO on Jan 25 and 29. Another 4,000 tons a day were being supplied by local refineries.

The country’s total stocks of petrol were reported at 65,000 tons on Tuesday. The sources said the government was still confused about exceptional demand for petrol as it significantly surpassed even the sale of high speed diesel. The diesel sale usually averaged at 15,000 tons compared to 20,000 tons of petrol, the prime minister was informed.

The petroleum ministry officials, however, wondered why the ministry of water and power was kept off the probing screen despite its critical role in the financial crunch faced by the PSO. They said the prime minister was informed that the power sector’s payables to PSO stood at Rs181bn on Tuesday despite some payments made over the past few days.

They said the PSO’s furnace oil stocks had exhausted on Jan 13 and some quantities available with power plants would also end on Jan 22, while two cargoes of 60,000 tons each were expected to reach Karachi by Jan 25 and 27.

Officials said the PSO stated at high-level meetings on Tuesday that it could not take responsibility for continuous supplies unless it was paid Rs87bn immediately to clear its earlier dishonoured LCs and defaults to the oil refineries for future product uplifting.

A senate secretariat statement said the senate chairman had called federal ministers for finance, water and power and petroleum to appear before a joint sitting of Senate’s standing committees scheduled on Friday and also bring along the secretaries, the Ogra chairman and the PSO managing director.

The meeting will be presided over by chairpersons of the committees concerned Nasreen Jalil, Zahid Khan and Mohammad Yousaf. The single-point agenda would be to look into the causes of the current crisis and find a permanent solution.

Meanwhile, the PSO said it had successfully managed to overcome fuel shortages in some parts of Punjab by increasing imports and uplifting petrol from local refineries. It said two vessels were expected on Jan 25 and 29, while four vessels had been arranged for February.

Published in Dawn January 21st , 2015

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