ISLAMABAD: Amid controversies swirling round petroleum disaster and pricing, the Oil and Gasoline Regulatory Authority (Ogra) has discovered fault with official dealing with of the demand and provide mechanism, resulting in countrywide shortages, hoarding and black advertising of oil by market gamers.
In an in depth report submitted to the federal cupboard, Ogra additionally challenged the place of the Ministry of Power Petroleum Division (MEPD) that because the regulator it was liable for guaranteeing 20-day inventory always. The regulator quoted a collection of guidelines and legal guidelines to say that upkeep of inventory and clean provide all through the nation was the accountability of the petroleum division and the director normal oil underneath the MEPD.
The regulator has additionally connected quite a few its communications to the MEPD, warning and highlighting the build-up to the provision disaster and the way chronologically the workplace of directorate normal oil (DGOil) had been altering numerous choices. The report additionally accommodates an up to date standing on implementation of the cupboard choices on June 9 wherein Ogra had reported penalties imposed on 9 oil advertising corporations (OMCs) for violation of guidelines.
The report mentioned the petroleum secretary was on March 20 clearly confirmed petrol shares for 15 days and diesel for 43 days with an recommendation for “instant decision making regarding demand/supply”. On March 25, the MEPD requested all OMCs and refineries “to cancel their planned imports”. The very subsequent day (March 26), the MEPD moved a abstract which was accredited on March 27 by the Cupboard Committee on Power (CCoE) to rationalise oil imports, closure of three Karachi-based refineries and curbing manufacturing to 60-70 per cent of native crude by Parco and Attock refineries.
This was achieved with out Ogra’s participation or remark. Based mostly on the CCoE choice, operation of three refineries was stopped whereas imports had been already banned, thereby curbing the nation’s provide sources.
On April 4, the MEPD reported to Ogra that OMCs weren’t uplifting merchandise from Attock, Pakistan and Parco refineries which must be requested to “maintain 20-day mandatory stocks of HSD [high speed diesel] to meet the demand during harvesting season”. On April 6, all OMCs had been requested to uplift product from refineries and construct the required shares. The identical day, all refineries had been requested to function at 60-70computer throughput to satisfy larger demand, notably of diesel as imports had been already banned.
Ogra mentioned it placed on report on April 10 its “reservations” over sharing of the CCoE abstract after the choices had already been taken and identified “contradiction in the decision taken by CCoE on MEPD summary to operate with two refineries and fresh decision taken by MEPD to operate all refineries”.
The MEPD acknowledged Ogra’s issues on April 16 and appreciated the latter’s actions for obligatory storage/shares and mentioned the choices questioned by Ogra had been taken to rationalise all operational points relating to grease provide and logistic chain and it was no last choice to function Parco and Attock solely however had since been ratified by the cupboard, therefore last. Each the MEPD and Ogra pursued the market gamers to construct obligatory shares.
On April 28, the MEPD lifted the ban on import of diesel and petrol with the situation that importing OMCs can even uplift 20computer of their cargoes from native refineries. This choice was additionally not conveyed to Ogra.
On Could 28, the MEPD moved a abstract to alter pricing mechanism and sought postponement of value change from June 1 to June 16 to offer “an incentive to OMCs to import product at current PSO price and thereby avoid inventory loss”. Ogra opposed the proposal the subsequent day because it believed the “prevention of inventory losses will be at the expense of national exchequer/consumers” and it could put a nationwide firm — Pakistan State Oil — at drawback in following procurement guidelines.
On June 2, Ogra reported the inventory place and urged the MEPD to get the schedule of imports and native manufacturing underneath the Could 13 choice by the product assessment assembly modified and aligned to answer market demand and guarantee adequate shares and uninterrupted provides. It additionally requested the MEPD to rearrange further cargoes for imports to mitigate the state of affairs.
Citing a collection of guidelines, legislation and evidences, the regulator mentioned: “It is crystal clear that as per applicable policy and law/rules, MEPD holds the exclusive responsibility to anticipate any such situation and take the remedial measures i.e. increasing local refineries’ production up to maximum and ask/ensure additional imports by OMCs to avoid the crisis”.
Furthermore, the import of petroleum merchandise was “patently a policy issue involving foreign exchange, which exclusively rests with the federal government of Pakistan i.e. the Ministry of Finance and line Ministry of Energy & Petroleum Division”, Ogra famous.
It mentioned that underneath rule 7 of Pakistan Petroleum (Refining, Mixing and Advertising and marketing) Guidelines, each refinery was required to submit its half-yearly manufacturing programme to DGOil of the MEPD which had the powers underneath rule eight to approve such a programme or change it, if required, underneath rule 9. Below rule 10, the DGOil can also be to manage the refineries to course of crude oil or feed shares from home or international supply.
Below rule 13, the DGOil can also be to specify and guarantee upkeep of crude oil shares by refineries and merchandise by OMCs underneath rule 30A. Rule 30B empowered the DGOil and the MEPD to “access the deficit volumes of petroleum products and assign to OMCs specific volume to be imported to meet the demand”.
Additionally, it placed on report that the MEPD often holds product assessment conferences on a month-to-month foundation with all stakeholders — OMCs, refineries, Ogra, energy vegetation, PIA, Railways, and many others — “as MEPD is the authority for ensuring the product availability in the country”. The conferences assessment all of the points and assessments — native manufacturing, carryover inventory, change in consumption behaviour, and many others — after which finalise “the Product Import Plan that include details of each and every ship, cargo, date of arrival”, which is accredited by the DGOil.
Ogra’s accountability was restricted to creation of storages by corporations earlier than permitting them advertising and sale of merchandise. The regulator mentioned the nation had a complete storage capability of 1.45 million tonnes of petrol and diesel and virtually half of that (751,000 tonnes) storage capability had been constructed over the past 4 years with an funding of Rs75 billion.
The accountability of filling this storage capability with product inventory for 20 days was the accountability of the MEPD. “Neither it is the mandate of Ogra to stop/curtail local refineries’ production or to ban imports, nor there exists any decision of Ogra in this regard whatsoever,” the regulator concluded, placing all the blame on MEPD for the petroleum disaster.
Printed in Daybreak, June 29th, 2020