Govt denies fuel shortage, accuses OMCs of profiteering

Updated Jun 06 2020

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Oil tankers are parked in Karachi’s Shireen Jinnah Colony. Fuel shortage has been reported in various parts of the country.—File photo
Oil tankers are parked in Karachi’s Shireen Jinnah Colony. Fuel shortage has been reported in various parts of the country.—File photo

ISLAMABAD: Amid aggravating petroleum shortage across the country, the government on Friday accused the oil marketing companies (OMCs) and their retailers for creating artificial shortage for profit maximisation.

In a tweet, Minister for Power and Petroleum Omar Ayub Khan accused “some oil marketing companies and retailers for creating artificial shortage of petrol and diesel for illegitimate profits”.

He said the government had decided to expose such companies and dealers and take action against them with the help of the regulators and provincial governments. “Their licences will be cancelled,” Mr Khan announced and claimed that there was no petroleum shortage in the country.

The Oil & Gas Regulatory Authority (Ogra) on the other hand, issued warnings to all oil companies for apparent collusive and anti-competitive practices in fixing the price of high octane blending component (HOBC) at an artificially higher rate despite massive reduction in prices of regulated products.

Data shows petrol consumption coverage for eight days

Some oil companies accused the Directorate General of Oil under the Petroleum Division to have mismanaged the situation through knee jerk decisions and changing common decisions by all the stakeholders. They said the government had first cancelled oil imports and changed berthing schedule of some favourite entities.

A statement was also issued by the Petroleum Division which claimed sufficient stocks of petrol and diesel were available in the country and citizen should avoid panic buying. “Petroleum Division emphatically states that there is sufficient quantity of petrol stocks in the country,” the statement read.

The Petroleum Division also said that additional production by refineries as well as planned imports were on schedule to meet the monthly needs. It said the country had about 272,000 tonnes of petrol and 376,000 tonnes of diesel were available in the stocks — sufficient for 12 days and 17 days respectively — with OMCs, refineries and on port.

However, the official record of the Petroleum Division available with Dawn put the total usable stocks of petrol with all the OMCs put together at the end of Friday at 239,000 tonnes, showing consumption coverage for eight days. The data sheet also put total diesel stocks at 351,000 tonnes, showing consumption coverage for five days.

The detailed data, on the other hand, revealed that there was wide gap in product availability across the country and some parts had very tight supply situation while many retail stations were completely shut down. Even these stocks were uneven in different parts within those provinces. Officials privately concede that retail stations of some OMCs had completely dried out.

For example, Punjab had on average petrol stocks (73,000 tonnes) only for four days by Friday night compared to quite healthy stock position (159,000 tonnes) for 20-day coverage in Sindh. Balochistan and Gilgit-Baltistan had petrol stocks for only three days while Khyber Pakhtunkhwa had stocks for five days. The OMC’s total petrol stocks in Balochistan stood at 2,000 tonnes, GB at 440 tonnes and KPK 12,000 tonnes.

Likewise, the data sheets also indicate that diesel stocks in Punjab, KP and Gilgit were sufficient only for four days each. Punjab’s total stocks stood at 94,000 tonnes on Friday with average daily consumption for June estimated at 24,000 tonnes. KP’s total diesel stocks stood at 18,000 tonnes and Gilgit’s 994 tonnes – both for four days each. Sindh had diesel stocks for nine days (71,000 tonnes) and Balochistan had 1,272 tonnes, enough for 12 days.

The Petroleum Division official named Shell Pakistan and Total Parco that had low stocks. “It is unfortunate that some OMCs and/or their dealers have resorted to such methods for profit maximisation that is causing shortages/dryouts for the general public and are having an adverse impact on the lives of the esteemed consumers”.

The Petroleum Ministry said appropriate actions were being taken jointly by Petroleum Divi­sion, Ogra, Competition Commis­sion of Pakistan and all relevant stakeholders, including the provincial governments proactively to normalise the situation.

The Petroleum Division said it was in contact with all OMCs and most do not have any major shortages. “Shell and Total Parco are low on stocks but their additional imports are arriving on 8-10 June after which their stocks will also be replenished,” the division said.

It separately wrote letters to all the chief secretaries to issue instruction to all deputy commissioners to ensure lifting up of petroleum products from depots of OMCs to ensure adequate supply of petrol and diesel and physically check and verify retail outlet wise stocks and share with the federal government.

The provinces have also been asked to take punitive action under Price and Control Prevention of Profiteering and Hoarding Act of 1977 against pumps and dealers involved in creating artificial dryouts.

Published in Dawn, June 6th, 2020