OMCs pocket billions by keeping products at bonded stores

Aftab Ahmed

Islamabad: The Oil marketing companies (OMCs) pocket billions from the consumers by keeping petroleum products at custom bonded stores.

They are bound to store the POL products at POL storage. But they are not doing so, following expected revisions in oil prices and taxes. They store products following the expected rise in oil prices, leading to a shortage of petroleum products.

However, the government is helpless before the oil mafia, and no investigating body can touch these oil mafia as they (OMCs) have legal cover under existing import procedures.

So, it may be interesting and shocking that Oil Marketing Companies (OMCs) have legal cover to exploit and manipulate the consumers when expected revision in oil prices and make money following revision in taxes followed by a revision in oil prices.

A senior official of the Petroleum Division has pointed out a legal robbery in a high-level meeting and suggested. Therefore he suggested some mechanisms to control these malpractices. OMCs do not make money, but they also create shortages in the country.

https://newztodays.com/pti-govt-to-pocket-rs-540-billion-from-gas-consumers/

Secretary Petroleum Asad Hayaud Din also highlighted this issue in a high-level meeting. Under the existing import procedures, he recommended the products should keep at custom bonded stores. Rather the OMCs held the products in the bonded stores for taking benefit of this legal cover. The OMCs waited for prices trend and expected revision in prices and taxes for de-bonding accordingly.

However, a special assistant to Prime Minister on Petroleum Nadeem Babar,, also expressed helplessness on this issue. It is beyond the regulator’s control. Therefore, it needs changes in the procedures to ensure a 21-day cover.

Sources told Newztodays.com that government authorities know the malpractices of OMCs. They were pocketing billions from the consumers. Hence they were allegedly involved in creating shortages in the country.

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Quoting an example, officials said that the same happened in June this year when the entire country suffered reduced oil prices. The Director-General (DG) Oil wrote a letter to the oil industry in early June. Anticipating an oil price, he expected to increase in July. So, this was good news for the oil industry. They curtailed the entire supply to their retail outlets shifting the burden on the state-run oil marketing company Pakistan State Oil (PSO) that had suffered multi-billion rupees loss.

Following the result of malpractices by other OMCs, Pakistan State Oil (PSO), the leading oil marketing company (OMC) of the country,, For the year ended June 30, 2020, the company reported a loss after taxation of Rs6.5 billion, translating into a loss per share of Rs13.8.

In its meeting held recently, the board had also noted that the unprecedented losses of Rs16.4 billion incurred during Q4FY20 eroded the net profit of Rs3 billion earned during the first three quarters and resulted in a net loss for the complete fiscal year 2020.

During Q3FY20, PSO outlets’ daily average sales surged by 122% despite the massive strain on the company’s supply chain.

During May-June, the company imported eight additional cargoes of high-speed diesel and two additional cargoes of motor gasoline to avert a major fuel crisis.