OGRA silent on illegalities by oil marketing companies

On Sunday, the Pakistan Petroleum Dealers Association (PPDA) said that the government should safeguard filling stations from the highhandedness of oil marketing companies (OMCs). It noted that leaving petroleum dealers at the mercy of OMC amounts to forcing them to go for adulteration and short-measuring to survive.

Speaking at a meeting, Executive Member of PPDA Hassan Shah said that distributors’ profit margins are always lower than that of retailers in every business. Still, OMCs make more profit per litre than dealers despite reduced business costs.

He added that OMCs sell tens of millions of litres daily, whereas filling stations sell a few thousand litres daily, and their business costs are much higher than OMCs.

Since fuel is regulated, no dealer can charge more than the ex-outlet price set by OGRA. The regulator also sets the ex-depot price for OMCs, yet they overcharge under private Franchise Agreements, which vary from 50 paise to Rs 1.50 per litre.

Although millions of invoices prove the continued violation by OMCs, the OGRA conveniently avoids it for some obvious reasons.

He informed that OMCs would stop supply and start hoarding across the country except for Karachi, Lahore, and Islamabad if prices were expected to rise, leaving almost 70% of outlets run dry, even when dealers pay in advance.

He said that sometimes OGRA raids petrol pumps as an eyewash; it knows the truth and only shepherds the influential OMCs. He furthered that only Pakistan has a higher per-litre margin for OMCs than petroleum dealers.

Hassan Shah said that the margin of OMCs and dealers had been clubbed together intentionally, allowing the exploitation of dealers. A high-powered committee should be appointed to determine profits separately to fix this anomaly.

He demanded that a study be conducted by PIDE, LUMS, or a leading chartered accountancy firm to bring facts to the limelight, which would help the proposed committee make the right decision in reducing oil market distortions.

The committee should gather data from all over the country to determine the average sale of a filling station and investigate whether a petrol pump owner can sustain the business after covering utility bills, staff salaries according to minimum wage, taxes, and other expenses.

He suggested determining the average sale of OMCs and their business costs and fixing their profit by their expenses.

Leaders of the PPDA, Khawaja Atif Ahmed, Nauman Butt, Humayun Khan, Zaheer Ahmed Paracha, and Nadeem Aziz Khan, also spoke on the occasion.

They demanded a percentage-based separation of profits for dealers to save them from fluctuating oil prices.

They added that filling station owners cannot do business in the current scenario, pushing them to opt for unethical practices to avoid bankruptcy.

If PPDA demands were sidestepped, dealers would continue to face hardships, and millions of consumers would continue to pay for the discrepancies in the system, they warned.

In this regard, the Chairman of the PPDA, Abdul Sami Khan (SI), recently met Mr. Syed Nazir Abbas Zaidi, Secretary General of the Oil Companies Advisory Council (OCAC), and top representatives of all major OMCs. They included Mr Asif Iqbal, CEO, TPPL; Mr Raja ImranUllah, DCCO, PSO; Mr Omer Shafqat, CEO, TAJ; Mr Zeeshan Hameed, NSM, TPPL; Mr Hasnain Shah, NSM, Shell, Mr Asif Iqbal, NDM, Shell, Mr HabibUllah Chandio, RM, Shell, and Mr Arshad, RM, GO.

Khan later assured the petroleum dealers community that an arbitration committee would soon be created to eradicate the menaces of illegal Franchise Fee by OMCs, senseless split of margins between OMC and Petroleum dealers, malpractices by OMCs in Lubricants pricing and forced lubricants sale, hoarding by OMCs before price rise situations.

He also assured the complete abolishment of the exploitive condition of presenting Lease Agreements with OMCs for renewal of Explosives Department Licenses of Petrol Pumps.

he petroleum dealers have strongly welcomed and hailed this announcement from their leader. Abdul Sami Khan (SI) has also notified an action committee of competent dealers for this specific task.

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