ISLAMABAD: The Petroleum Division has asked the Auditor General of Pakistan (AGP) to conduct a forensic audit of Oil Marketing Companies (OMCs) for the artificially created countrywide petrol crisis in June 2020.
Although the Petroleum Division has written a letter to AGP and requested a forensic audit of the top 10 OMCs to assess whether any company violated license conditions, hoarded product in anticipation of price rise, or was involved in any other illegal activity, the ministry has not given any timeline for conducting the audit.
According to a copy of the letter available with Profit, the forensic audit will be conducted in terms of market share as these companies represent nearly 95 per cent of the officially recorded sale of sales of motor gasoline.
As per details, the ministry has asked the AGP to find the quantity of motor gasoline the OMCs ordered to local refineries or imported to meet demand during June 2020.
Similarly, the AGP will find out whether local refineries provided the ordered quantities and, if not, why?; if they had sufficient stocks when the shortage was claimed to meet the license conditions imposed by OGRA, If not, what was the shortfall in stocks? How much of this shortfall was caused by shortage ordering and how much by non-delivery? And also if there were any instances where an OMC stocked storage tanks but not supplying petrol pumps.
Profit also learnt the AGP will investigate if any OMC had imported the product available on high seas but was deliberately not berthed in order to gain an expected price advantage.
“The investigation should look into if there a product on outer anchor, and if so, was there any port constraint in berthing these vessels? If the port did not have unloading constraints, could this have mitigated the shortage?” the letter adds.
Furthermore, the AGP will also find the typical demand in the month of June given seasonal variation and the total recorded demand for the month of June given seasonal variation, the demand in June 2020 and if there was an anomaly during that month.
The petroleum Division has further asked AGP to find how the market share for each of the top 10 OMCs change in the said month compared to their share a few months earlier or a few months later, if there was any evidence of booking sales but not deliverable to petrol pumps.
The letter also requests an investigation into any possible collision of any government agency or department with any OMC, how the smuggled product affected the demand and supply position during the crisis besides, finding out what was the profitability of each such OMC for June 2020, and how did that compare with typical monthly profitability for the month of June in pre-pandemic times as well as just after Covid-19 related restrictions being lifted.
It is pertinent to mention here that the federal cabinet had directed to conduct this forensic audit during a meeting wherein then special assistant to prime minister (SAPM) on Petroleum, Nadeem Babar, had informed the forum that a total of 66 OMCs were operating under license in the country, with the top eight holding 92 per cent of the market share.
“It must be examined whether the remaining are surviving on malpractices such as smuggling,” he had said.
