ISLAMABAD: Top oil marketing companies, refineries and pipeline companies have refused to cooperate with Ogra in implementation of the new Pakistan oil rules 2016 approved by supreme body of council of common interests (CCI) headed by Prime Minister Mohammad Nawaz Sharif.
Both sides have refused to budge an inch from their stated positions with regard to the implementation of the new oil rules. Ogra, being the responsible regulatory authority working under Cabinet Division, is constrained to implement the new rules after being approved by CCI and notified by cabinet division. It served show cause notices Friday on those OMCs, refineries and oil transportation companies not implementing new rules.
These companies include Pakistan State Oil, Shell Pakistan Limited, Overseas Oil Trading Company, TOTAL PARCO Limited Company, Admore Gas Company Limited, Gas and Oil Pakistan Limited, Attock Petroleum Limited, Askar Oil service Limited, Bakri Trading Company, Pak-Arab Pipeline company, Pak-Arab Refinery Limited, Attock Refinery Limited, Pakistan Refinery Limited and National Refinery Limited asking them to immediately submit before the new oil rules 2016 and seek the licenses for permission of their operations in the country as the previous oil rules stand repealed. And if they do not comply with, they will be punished with punitive actions including the cancelation of licenses.
However, Ogra has managed to partially get the new oil rules implemented as 14 new OMCs (in construction phase), 3 OMCs (operational), 2 refineries operational, and I refinery (under construction) and in addition, 70 percent of lubricant industry have already applied for the licenses under the new oil rules.
The CCI approved the new oil rules with the main purpose of the oil sector regulation by Ogra to foster competition, increase private investment and improve the efficiency and operational performance of the regulated companies.
Pakistan Petroleum (refining, blending & marketing) rules 1971 covered only the licensing for establishing new oil marketing companies and registration of lube oil blending/reclamation plants.
Under the new rules, from February 3, 2016 in 90 days times oil companies had to deposit Rs 2 million fee with Ogra for licenses for 15 o 30 years. In addition, they have to give the annual fee of 0.005 percent of gross sale.
“But the main oil marketing companies, refineries and transposition and pipeline companies have made cartel and all set to default the new rules,” reveals the official document of Ogra’s correspondence with ministry of petroleum and natural resources also available with The News.
Oil marketing companies reportedly moved the Islamabad high court against rules approved by CCI and got the stay order. But Ogra top officials are of the view that regulator has not received any kind of information from the court about the stay order. And this is the main reason that Ogra has issued the show cause notices to the main OMCs and refineries.
The record of official correspondence between Ograand OMCs, refineries and pipeline companies also available with this correspondent clearly shows the fact that CCI presided by the prime minister had approved the new oil rules after the 6 years’ brainstorming with private and public sector stakeholders and getting inputs at every level from the OMCs, refineries and pipeline companies.
Even then thirteen oil marketing companies, five oil refineries and one oil transportation company have challenged the new oil rules 2016 arguing that the said rules were made without their consultations and being the stakeholders it was their right to give inputs during the formulation of the new rules. The Industry sources close to OCAC (oil companies’ advisory council) on the condition of anonymity said that they are unable to pay more for licenses fee and on top of that they are being asked to pay 0.005 percent of the gross sale as annual fee. They said that the oil economies in the world having been facing the loss because of perpetual decrease in prices of petroleum products and the same situation is with country’s oil marketing companies and refineries.
“We are not in a financial position to cater to needs of the new rules, but if the amendments prone to provide solace to them are made, we will have no option but to fully cooperate,” they said. However, they accepted that when the draft was being finalized on new rules for CCI, they gave inputs with some disagreements.
However, Ogra’s concerned officials said that they have not been given any notice by the court informing that the stay order has been granted and the court has convened the Ogra representative on June 8, 2016 for hearing on the petition of oil marketing companies against the new rules. And that is why the Ogra has served the show cause notices to the top guns in OMCs, leading players in refineries sector asking them to comply with the new oil rules.