ISLAMABAD: The government is reluctant to fully implement recommendations of an inquiry committee, headed by a special assistant to the prime minister, into the petroleum crisis that paralysed several parts of the country in January.

Sources told Dawn that the committee, led by Barrister Zafarullah Khan, had held Pakistan State Oil’s (PSO) management board responsible for failing to perform its functions under Section 7 of the Marketing of Petroleum Products (Fede­ral Control) Act of 1974.

The inquiry report, seen by Dawn, recommended that under the act, the government “immediately de-notify the existing board and appoint a new board on professional lines and the existing members of the board may be blacklisted for other such assignments in future”.

The recommendation was partially implemented, according to the wishes of an influential lobby within the government, an official close to the inquiry committee told Dawn.

He said that while the board was immediately de-notified early last month, one of its members – who also headed the crucial ‘audit and finance committee’ – was made acting managing director for three months, instead of being blacklisted for such future assignments, as called for by the inquiry report.

Unlike normal listed companies with a board of directors, the PSO is guided by a management board responsible for greater management issues. The board’s audit and finance committee is normally required to guide the company on financial arrangements for imports.

Secondly, other members of the board were removed from their assignments but not blacklisted. It is ironic that the country’s largest company in terms of revenue is currently being run without a board of management.

Also read: PM suspends officials over fuel crisis as anger escalates

In the first week of February, the prime minister had ordered the appointment of a fulltime managing director before April 30, also on the recommendations of the committee.

As of March 9, the government had not yet issued an advertisement seeking applications for the post. A tailor-made advertisement is said to be in the making for the post of PSO chief.

The report required the Establishment Division to initiate disciplinary proceedings against the secretary, additional secretary and director general (oil) of the petroleum ministry for ‘misconduct’. A service law expert was to be engaged at the outset to ensure that inquiry proceedings were initiated with due care and caution.

The ministry was directed to review internal systems, job descriptions and other matters to flag such crises in advance by setting up a monitoring and evaluation cell to examine the performance of the ministry and its organisations. This is yet to begin.

On the recommendations of the inquiry committee, legal proceedings have been initiated against former acting managing director (MD), two deputy managing directors (DMD) and two senior general managers of PSO.

The inquiry also pointed that the PSO managing director was working on an ‘acting charge’ basis for more than one year, despite the PM’s orders from January 2014 for a permanent posting. “The appointment was not made and instructions were deliberately not followed, even while it appeared that there was no legal hitch to such an appointment. This aspect also merits consideration and responsibility must be fixed as to why such a vital appointment was not made in such a critical institution, despite the clear orders of the PM,” the report said.

Barrister Zafarullah also recommended that PSO secure more banking lines, both funded and unfunded, and explore possibilities of raising funds through innovative products, including listed capital market instruments, to meet its working capital requirements while assuming a six-month delay in payments from the Ministry of Water and Power, which is a routine delay.

The inquiry committee neither interviewed all the accused nor gathered the relevant data. On the role of PSO, it recommended that the responsibility of the crisis lay on with the acting MD, DMD (finance), DMD (operations), senior GM (supply chain) and general managers of retail.

It was pointed out that PSO held only 46 per cent of the market share, whereas other oil-marketing companies (OMCs) sold 56pc of petrol in the country, which meant other OMCs neither had the storage capacity nor stocks to meet unprecedented demand. It was also noted that in the first seven days of January, PSO’s market share was 51pc, which meant that the other 14 OMCs were short of product.

The sources said the senior supply chain managers had been highlighting the lack of an arrangement between the PSO and Pakistan National Shipping Corporation since October.

Lower-level PSO executives had gone on the record in December to say that petrol shortages were emerging.

Published in Dawn March 9th , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play