Oil marketing companies blame energy ministry for fuel shortage

Updated Jun 05 2020

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CCP has initiated an inquiry to ascertain whether the oil shortages were caused by anti-competitive activities. — AFP/File
CCP has initiated an inquiry to ascertain whether the oil shortages were caused by anti-competitive activities. — AFP/File

ISLAMABAD: After regulatory bodies reacted to public complaints regarding fuel shortage in the country, oil companies on Thursday turned the tables on government blaming the Ministry of Energy for lack of oversight.

The Competition Commission of Pakistan (CCP) initiated an enquiry in to the fuel shortage in various parts of the country after the Economic Coordination Committee (ECC) took notice of the issue.

However, the Oil and Gas Regulatory Authority (Ogra), in a statement issued on Thursday claimed that there was no shortage of petroleum fuel in the country.

The statement added that the “district managements of all the provinces, GB and AJK have been advised to ensure availability of petrol on retail outlets and advise Ogra in case of any complaint of hoarding.”

Ample supply of petroleum products in the country, claims Ogra

The regulator also advised oil companies to ensure import of committed cargos and refineries to ensure production for the month of June, while claiming that the country’s oil stocks are sufficient.

“Ogra and Ministry of Energy are taking all possible measures to ensure adequate supply to retail outlets.” Ogra spokesperson said on Thursday.

Possibly, to shift the blame of oil shortage, Ogra also issued show-cause notices to oil marketing companies (OMCs) seeking explanations and reasons for petrol shortage in country.

The Gas and Oil Pakistan (GO) marketing company, in response to the notice said the “demand of petroleum products in the country is reviewed at monthly Product Review Meeting (PRM) led by the Ministry of Energy (Petroleum Division). The PRM reviews the demand for the next three months and after the allocation of local refinery production, the balance is allowed to be imported.”

However, the GO said that despite assertion from the Oil Companies Advisory Committee (OCAC) for higher imports in May and June due to wheat harvest seasons, the Ministry of Energy directed oil companies on Mar 25 “to cancel their planned imports (April onwards) and increase their off-take from refineries so that refinery operations are maintained at an adequate level”.

However, as energy ministry directed refineries to enhance their storage capacities and facilitate OMCs, the mismanagement in the wake of coronavirus lockdown resulted in lack of coordination.

Meanwhile, the CCP has initiated an inquiry to ascertain whether the oil shortages were caused by anti-competitive activities.

The inquiry will examine why the oil price reductions have not resulted in corresponding reduction in lubricants and other oil-based product prices, including hi-octane, which are primarily deregulated products.

“Sudden shortage of fuel across country at a time when the government has reduced prices followed by low demand due to Covid-19 pandemic arises suspicion that artificial shortage might have been created,” the CCP noted.

The terms of references of the inquiry are to determine if shortages were due to a lack of supply to oil companies or hoarding at the distribution level.

“Further, the possibility of abuse of dominant position by these companies in certain areas cannot be ruled out,” a CCP official said while adding that the “government’s decision to provide relief to consumers by reducing fuel prices appears to have irked business undertakings to make desired profits.”

The ECC had also directed the Ministry of Energy, CCP and Ogra to ensure requisite stocks with the OMCs and the supply to fuel stations across the country was regular and intact throughout the month.

Published in Dawn, June 5th, 2020