It is a bad day for Ogra and private Oil Marketing Companies (OMCs) but a good day for accountability. The fifteen-member Inquiry Commission headed by the FIA, to probe into the shortage of petroleum products that hit the country in June 2020 has recommended strict action against secretary Petroleum Division, DG Oil, Ogra and OMCs.
Most of the blame lies on Ogra—not just because of its actions but rather because of inaction. The “r” in Ogra stands for “regulatory” but it seems to be doing everything but that. It was established in 2002 and the Pakistan Oil Rules promulgated in 2016 gave it the authority to regulate oil and gas companies in Pakistan. Yet its skirting of responsibility led to crisis upon crisis in the industry this year. The report shows that OMCs have been flagrantly flouting the writ of the state and indulging in extreme excesses, without any notice or reprimand from the regulatory authority, with Ogra being a silent spectator and in some cases even facilitating these excesses. Twenty-five OMCs were granted “provisional” marketing licenses in the last fifteen years when there is no such provision in the rules. More than 2100 retail OMC outlets exist without maintaining the required storage capacity of 40 tonnes, with no or very little punitive action by Ogra. Nor has there been any penal action by Ogra on illegal joint ventures or hospitalities between OMCs, no mechanism to ensure lifting of the local quota of petroleum products by OMCs and no checks on operations of unlawful private storage companies.
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One cannot understate the damage suffered by the consumers because of the anti-competitive and illegal actions of the OMCs, and the blind eye of Ogra. Strict action must be taken against those accountable—there need to be resignations, massive fines and a crackdown on irregular licenses and evasion of supply quotas.
https://nation.com.pk/16-Dec-2020/regulatory-failures
Regulatory Failures: Editorial in The Nation, December 16th, 2020
It is a bad day for Ogra and private Oil Marketing Companies (OMCs) but a good day for accountability. The fifteen-member Inquiry Commission headed by the FIA, to probe into the shortage of petroleum products that hit the country in June 2020 has recommended strict action against secretary Petroleum Division, DG Oil, Ogra and OMCs.
Most of the blame lies on Ogra—not just because of its actions but rather because of inaction. The “r” in Ogra stands for “regulatory” but it seems to be doing everything but that. It was established in 2002 and the Pakistan Oil Rules promulgated in 2016 gave it the authority to regulate oil and gas companies in Pakistan. Yet its skirting of responsibility led to crisis upon crisis in the industry this year. The report shows that OMCs have been flagrantly flouting the writ of the state and indulging in extreme excesses, without any notice or reprimand from the regulatory authority, with Ogra being a silent spectator and in some cases even facilitating these excesses. Twenty-five OMCs were granted “provisional” marketing licenses in the last fifteen years when there is no such provision in the rules. More than 2100 retail OMC outlets exist without maintaining the required storage capacity of 40 tonnes, with no or very little punitive action by Ogra. Nor has there been any penal action by Ogra on illegal joint ventures or hospitalities between OMCs, no mechanism to ensure lifting of the local quota of petroleum products by OMCs and no checks on operations of unlawful private storage companies.
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One cannot understate the damage suffered by the consumers because of the anti-competitive and illegal actions of the OMCs, and the blind eye of Ogra. Strict action must be taken against those accountable—there need to be resignations, massive fines and a crackdown on irregular licenses and evasion of supply quotas.
https://nation.com.pk/16-Dec-2020/regulatory-failures
Published in Pak Media comment and Pakistan