“We have not opened any outlets in these two provinces particularly in the last three to four years and there are no plans to set up new outlets as long as smuggling of Iranian products are thriving,” officials in two leading foreign oil marketing companies told Dawn on Thursday.
They said that their companies have only upgraded and renovated their outlets in Balochistan and NWFP as a part of the campaign to give a new style and look to the outlets all over the country.
“We are not considering to pull out from these provinces. We are staying right now,” an official in an OMC said, adding that opening new pumps specially in Balochistan areas is not feasible and profitable in view of rising share of smuggled products.
However, Balochistan and the NWFP have seen closure of many old sites in the last one and a half years. An official in the Oil Companies Advisory Committee (OCAC) said that Balochistan used to have 438 retail outlets of OMCs in June 2002, which has now curtailed to 418 in June 2003. Similarly, total retail outlets in NWFP are 805 compared to 815. Opening of retail pumps has increased in Sindh which has now 1,226 outlets as compared to 1,164 a year back while in Punjab the number of outlets has declined to 3,124 as compared to 3,144.
OMCs and the OCAC has informed the government that the smuggled Iranian petrol has captured 18 per cent market share mainly in Balochistan and some parts of the NWFP out of total consumption of 1.5 million tons per annum. Similarly, the share of smuggled diesel now stands at four per cent out of total annual country’s consumption of 8.342 million tons.
An estimated 265,000 tons of Iranian petrol find the way into the Balochistan and NWPF areas per annum, while 347,000 tons of diesel sell every year in these areas at cheaper rates.
Smuggled Iranian petrol is cheaper by 17 to 94 per cent as compared to local product mainly in Balochistan and some parts of the NWFP, while smuggled diesel is being sold at 16 to 111 per cent lesser price as against local product.
Smuggled petrol in Taftan area is being retailed at Rs17 as compared to Rs32.80, while in Quetta, dealers are charging Rs23 for smuggled petrol, which is 36 per cent cheaper as compared to price of local product of Rs31.40 per litre. In Sibi, smuggled petrol is available at Rs27 per litre as compared to Rs31.74 per litre of local petrol.
Price of smuggled diesel is tagged at Rs11 per litre as compared to locally made Rs23.22 per litre in Taftan area. In Quetta smuggled petrol is being retailed at Rs17 per litre as against locally produced diesel of Rs21.81 per litre. The rate of smuggled diesel in Sibi area is Rs19 in comparison with Rs22.15 per litre of local product.
The impact of petrol smuggling in Balochistan could be gauged from the fact that the petrol sales
of the OMCs has been continuously declining since 1996-97. Sales in Balochistan has dropped to 12,643 tons in 2002-2003 from 25,896 tons in 1996-97, showing a fall of 51 per cent. However, a drop of 45 per cent in petrol sales of OMCs has been witnessed in NWFP to 76,177 tons in 2002-2003 as compared to 137,389 tons in 1996-97.
Petrol sales have also fell two to eight per cent in other provinces in 2002-2003 as compared to 1996-97, but an official in the OMC said that the fall is largely because of CNG conversion of vehicles from petrol. However, in Balochistan and NWFP, free availability of smuggled petrol can be solely blamed for the decline in the sales, he added.
In diesel, OMCs sales in Balochistan plunged to 26 per cent in 2002-2003 to 315,081 tons as compared to 428,388 tons in 1996-97.
The colour of smuggled Iranian petrol is yellow as compared to pinkish colour of local product. The octane level in Pakistan is 87 and 90 while Iranian product has 60 octane level, which is inferior quality.
Smuggling of Iranian product is thriving in NWFP from Torkham- Khyber Agency and tribal agencies adjoining NWFP, while in Balochistan, the route of smuggling is Iran to Dalbadin to Quetta and Iran to Panjgoor to Basiman through tank lorries of 10,000 litre capacity each or in drums of 210 litres.
The Oil Companies Advisory Committee (OCAC) has informed the government that the national exchequer has been losing revenues of Rs6.2 to 7 billion in terms of duties and taxes in the last two years on account of these two major products. The total taxes on locally produced petrol (excise duty, petrol development levy and sales tax) now stands at Rs14.47 per litre. On diesel, the total taxes comes to Rs6 per litre which include petroleum development levy and sales tax.
OMCs have also provided pictures relating to hazardous method of storage of Iranian petrol and its unsafe dispensing procedure to the government. There is hardly any pump set up to store and dispense the oil products to the general public. Petrol is being stored in cans and drums at the road sides for sales or in front of shops. Some people have put on display the Iranian diesel in the drums at the main roads.
Cheap Iranian oil products are causing drop in OMCs volume resulting in decreased throughput per site, deterioration of standards at sites, closure of sites by the OMCs, revenue loss to the national kitty, inferior quality of product resulting in damage not only to the vehicles but to the whole environment and careless handling of smuggled products by the sellers thus putting lives of the general public at risk.
In order to curb the inflow of smuggled products, the OCAC has urged the government to seal the borders, enforce strict vigilance at Customs check-posts en-route the bordering provinces, conduct frequent raids by army and police teams at unauthorized storages and marketing locations and grant exemplary punishments to make this malpractice financially un-viable (offence should be made non-bailable and cognizable, fine up to Rs1 million and imprisonment for a term of three to five years).
The OCAC asked the government to involve governments of Iran and Afghanistan to help prevent this menace of smuggling.
