Daily Times

Special Advisor to the Prime Minister (SAPM) on Petroleum Nadeem Babar seems to have made some enemies by implying at the last meeting of the federal cabinet that small oil marketing companies (OMCs) might be engaging in malpractices like smuggling.

He informed the meeting that eight of 66 licensed OMCs held 92 percent of the market share, adding it was to be examined whether the remaining OMCs were surviving on malpractices, such as smuggling.

Small OMCs reacted sharply to the insinuation Tuesday, striking back by likening SAPM’s statement to opening a can of worms.

“The SAPM has brought to light the less known fact of three successive federal governments having unconstitutionally retained control of petroleum, despite the 18th Amendment clearly requiring that petroleum policies be formulated and supervised by the Council of Common Interests,” said a rather agitated advisor of a Karachi-based OMC.

A member of the Oil Marketing Association of Pakistan (OMAP), a trade body being registered to represent the smaller OMCs, told Daily Times that the SAPM will do the present federal government a “huge favour by not opening this can of worms”.

Stakeholders of two small OMCs struck back at the SAPM by questioning if it was fair on the part of a person tasked to advise the prime minister on petroleum to base his input on speculation.

“Flawed as it is, the report of the inquiry commission referenced by him cites several other reasons, most fundamental of which would be traced back to the SAPM himself”, said the owner of a small OMC, who asked not to be named.

Smaller OMCs have been privately protesting against being scapegoated in the report of the inquiry commission to investigate petroleum shortage published by orders of the Lahore High Court in December 2020.

Industry insiders say that most problems faced by small OMCs stem from the federal government’s reluctance to allow provinces any say in the formulation of petroleum policies. The federal government owns and controls what is referred to as Pakistan’s “Big Oil”, a cocktail of the country’s biggest exploration and production companies, refineries and oil marketing companies.

Owners of small OMCs blame all governments in the post 18th amendment period for not having given due attention to the unconstitutionality of the petroleum regulation.

“We fail to understand why the Sindh government also chooses to remain a silent spectator, and has never raised the matter in a CCI meeting or in the constitutional jurisdiction of the superior courts.”

The small OMCs that were licensed within the last 20 years have jointly invested in excess of Rs30 billion and are responsible for building more than half of Pakistan’s fuel storage during this period. These small OMCs have sponsored 60% of the under construction fuel storage facilities, despite their nominal market share of only seven percent, and supply fuel to motorists through more than 1,000 petrol pumps.

PM’s special advisor on petroleum has also faced the wrath of players in the liquefied petroleum industry (LPG) industry for pandering to the wishes of the importers ever since the federal government took it upon itself to rewrite the LPG (production and distribution) policy without being asked by the CCI. He has recently been the subject of scathing criticism by analysts and observers for owning substantial business interests in the energy sector that he directly or indirectly advises on.