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ISLAMABAD: The Auditor General of Pakistan (AGP) has shown serious concern over the Oil and Gas Regulatory Authority’s decision of not imposing penalty on all Oil Marketing Companies (OMCs) involved in June 2020 fuel crises as well as its weak monitoring and oversight role in maintaining necessary 20-days fuel stock by the OMCs.

This revelation was made in an Audit Report on the Petroleum Division and the Ogra for year 2020-21. The audit report says poor enforcement by the Ogra resulting in artificial shortage of oil.

The authority failed to fulfil the requirement of developing minimum 20 days storage capacity and to ensure uninterrupted supply of oil by the OMCs as per rules and conditions of licenses issued to the OMCs, which resulted in discontinuity of regulated activity and artificial shortage of oil in June 2020 on the plea that imports of petroleum products were banned by the Petroleum Division.

Punitive action was not taken against all the OMCs on the pretext of ease of doing business.

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A total penalty of Rs40 million was imposed only on six OMCs, while no penalty was imposed on M/s Askar, BPPL, BE Energy, Zoom, ZMOPL, Fuelers and Quality I Petroleum Ltd for discontinuing supply and hoarding of petroleum products during June 2020.

“Ogra also failed to invoke clauses of Rule 69 for imposition of further penalty despite continued default in maintaining 20 days minimum storage capacity on all OMCs besides penalty imposed on 6 OMCs was not aligned with the principle of proportionality because these OMCs created artificial shortage, earned undue profits and affected the whole country adversely”.

Audit is of the view that poor enforcement of relevant rules and lack of monitoring of license conditions resulted in maintenance of low stocks and hoarding of petroleum products by OMCs and hence oil shortage was created.

The audit also rejected the reply of Ogra given on January 22, 2021 that storage capacity of the country is sufficient to cater to minimum stocks of 20 days.

The report says that the Ogra could not succeed in ensuring development of minimum mandatory back up storage, which was “evident from imposition of penalties on OMCs by Ogra.”

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The audit report further says that the Ogra refused to share record relating to regulatory functions of the regulator.

“This attitude of the authority was tantamount to concealment of facts due to which rationale/working behind its decisions could not be reviewed.”

The Ogra in its January 25, 2021, however, stated that prima facie the question regarding the record pertaining to the regulatory decisions did not arise since each and every regulatory decision was always public and available of its website.

The Cabinet Division had taken up the matter with the Attorney General of Pakistan.

Copyright Business Recorder, 2021

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