Inquiry Report on petrol shortage recommends action against OMCs and disbandment of OGRA

December 15, 2020 (MLN): The oil inquiry commission’s report on the petroleum shortage in June 2020 has recommended stern action against OGRA, Ministry of Energy, Petroleum Division (MoEPD) and Oil Marketing Companies (OMCs) as it said that the oil crunch of June was not an abrupt eruption. It was more of an evolutionary event.

The oil crisis inquiry report pinpointed the incompetence of authorities. The report suggested remedial measures after an examination of an abridged version of the areas of the oil industry which include; disbandment of OGRA, cancellation of provisional marketing licenses of OMCs, punitive action against dubious activities of BYCO refinery and closure of illegal retail outlets.

A sad story of how an opportunity was transformed into a crisis started in March 2020 with the irrational decision of ‘import cancellation’ by MoEPD spanning over a month whereby the OMCs were asked to cancel their cheap international purchases. Instead of enforcing the OMCs to lift their local quota of purchases from refineries, the MoEPD went for the blanket import ban.

Regardless of this so-called ‘ban’, it is an admitted fact that 6 oil-carrying vessels belonging to private OMCs did dock and decant during the days of import embargo. Thus, the OMCs hue and cry about embargo is not all that true a reason for the shortage, the report said.

While consumers had to pay plenty for the failure of MoEPD to implement Product Review Meeting (PRM) decisions. The lifting of the import ban at the end of April coincided with the gradual rise of international prices of petroleum products albeit a little. The report highlighted that May and June witnessed the apathy of certain culprit OMCs which imported oil but hoarded or slowed down the supply to their retail outlets till the government increased the prices on June 26, 2020. Hence, general consumers were expropriated from their rightful gains.

Coming events cast their shadows before them. Seeds of the crisis were sown already by MoEPD, OGRA, Department of Explosives and a handful of malicious wrongdoers identified in the whole saga. OGRA inherited the regulatory functions of the oil industry from MoEPD in the year 2006. The oil Industry kept waiting for the new petroleum rules to replace the old Petroleum Rules of 1971.

As per the report, this was an era of legal ambiguity on the division of powers between MoEPD and OGRA which continues to date. From 2006 to 2020, the authority became the breeding ground of OMCs, the number which has touched 66. OMCs got unlawful provisional marketing licenses without developing their mandatory storage and stock facilities. It is pertinent to mention that cheap oil days could not be cashed due to criminal and deliberate omission of duty by OMCs to maintain a minimum stock of 20 days.  During Jan- Jun 2020, practically the storage of 90% of OMCs never touched the mark of 20-day stock per each retail outlet. DG Oil remained silent.

The failures of OGRA refuse to end. Mushrooming of illegal retail outlets, regularization of illegal retail outlets, illegal joint ventures or hospitalities, unlawful private storage companies, frequent unpunished violations of licensing conditions by OMCs and many more means OGRA specializes in earning discredits.  In the last 15 years, 25 OMCs were granted provisional marketing license. However,  there is no such provision in the rules to start marketing without the required storage.

MoEPD is an equal competitor of OGRA in this regard. No strategic storages, outdated refineries, ceremonial role of PRM, heavily beholden to OCAC, a private body for commending the oil industry on its behalf are some of the leading discredits of MoEPD.

The rest of the damage was done by the Department of Explosives, Port Authorities, smugglers and adulterers. Taking these failures as constant, the report said more crises of this proportion or even worse may occur in the future. The complete correction of the oil industry is required as per the report.

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Posted on: 2020-12-15T19:06:00+05:00