Pakistan: Fine imposed by Ogra is unjustified

OgraWhile the incumbent government headed by Mian Nawaz Sharif is never tired of making tall claims, unaccomplished targets and supremacy of merit and laws, the recent imposition of penalties by Oil and Gas Regulatory Authority (Ogra) is a complete eye wash.

These companies were found ‘guilty’ of not having ‘enough’ storage facilities but no fine has been imposed on Pakistan State Oil Company (PSO) that was the prime culprit of recent oil crisis. Ideally the highest fine should have been imposed on PSO for not having adequate inventories and failure in timely import. There is also a need to find it others i.e. Shell and Caltex also have required storage facilities.

Reportedly Ogra has imposed a Rs17.8 million fine on five oil marketing companies for not maintaining sufficient stocks of petroleum products in violation of their licence requirements which led to the country’s worst petrol crisis in January.

These companies were fined after completion of separate proceedings against them in which they were allowed to defend themselves. All of them were issued show-cause notices for not maintaining adequate stocks which resulted in acute shortages. The five companies were asked to deposit the fine within 10 days.

Rs9.1 million penalty was imposed on Askari Oil Marketing Company for violation of the Pakistan Petroleum Refining, Blending & Marketing Rules 1971 at the rate of Rs100,000 per defaulting petrol pump. Ogra said the marketing company’s defence was not plausible as it developed 91 outlets between 2011 and 2015. It was stated that the Company had violated the government’s policy and directives of the regulatory authority despite categorical instructions not to expand petrol pumps without necessary storage arrangements.

Rs4.7 million fine was imposed on Admore Gas Private. Authority instructed the Company first disown such petrol pumps and removed them from the list provided to Ogra. The Company was fined Rs100,000 per outlet for 47 pumps.

Rs1.6 million fine was imposed on on Byco Petroleum. Byco’s response to a show-cause notice was untenable because Ogra’s decision to suspend its marketing operations in 2011 was challenged by Byco which kept such stations running; they deposited the penalty in 2014 along with storage development plan and its operations were restored. Since Byco does not possess its own storage infrastructure, its addition of 16 pumps was termed violation of rules and the Company was asked to deposit Rs100,000 fine per pump.

Hascol Petroleum was fined Rs1.9 million because it also appeared to have misled Ogra. The referred storage facility by Hascol in KP was in fact storage of a lube oil blending plant. Ogra had asked the Company twice to get it inspected through third party inspectors if it claimed them to be storage infrastructure but remained reluctant. “The said storage, therefore, cannot be considered as HPL storage infrastructure in KP,” Ogra said and pointed out that it developed 19 retail outlets in KP and Baluchistan were in violation of government policy and Ogra instructions.

While imposing Rs0.5m fine on Overseas Oil Trading, Ogra said the Company had expanded its petrol pump network without back-up storage. The region-wise storage infrastructure was very vital and no such expansion could be allowed under rules unless backed up with necessary supply points and storage.


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