Inside Financial Markets

Ogra issues show-cause notices to top oil companies for overcharging

The Oil and Gas Regulatory Authority (Ogra) has issued show-cause notices to seven top oil marketing companies (OMCs) for alleged overcharging and substandard sale of petroleum products in Azad Jammu and Kashmir (AJK).

Informed sources said the regulator had also written to the AJK government to activate their district administration to take action against retailers found selling petroleum products of poor quality and lower quantity, and overcharging.

The companies that have been issued show-cause notices include Pakistan State Oil (PSO), Shell Pakistan Ltd (SPL), Total Parco Marketing Ltd (TPML), Attock Petroleum Ltd (APL), Askar, Admore and Overseas Oil Trading Company Ltd (OOTCL).

An official explained that the regulator could take action only against OMCs under the Ogra law and related rules for being licensees of Ogra while retail outlets were outside its legal jurisdiction.

Therefore, the authority started legal proceedings against the OMCs and referred the case of their retailers to respective district administration for further action.

The district administrations had the powers to impose fines or seal outlets.

The issue came to the fore when deputy commissioner (DC) of Rawalakot, Poonch, AJK, complained to Ogra that pumps of the OMCs in his district were “involved in overcharging and dispensation of substandard quantity of products to the commuters”. He asked Ogra “to depute an inspection team for assisting to check/inspect such defaulting sites and to take action” under the relevant laws.

Officials said an Ogra team assisted by the respective local administration in AJK visited various petrol stations in Rawalakot, Khaigala, Hajeera, Abbaspur and Bagh to check price, quantity and quality.

The inspection team found at least 16 retailers of the seven OMCs were overcharging. In some cases, the retailers were charging Rs3 per litre higher than notified rates. In other cases, the pump owners were found selling Rs1.56 to Rs2.8 per litre higher than notified rates.

They included Azeem Petroleum, Shahzeb and Wasif, Al Hussain and Shahid Petroleum belonging to PSO and Gulf Filling Station, Hajeera Filling Station and Bagh Filling Station of SPL; Ultra Fuel Station and Kashmir Petroleum of TPML and Al-Hussain Petroleum, Tahir Filling Station and Akhtar Petroleum of APL; Al-Farooq Petroleum and Ali Petroleum Service of Askar; Cheenar Petroleum of Admore; and Hill View Filling Station of OOTCL.

Ogra said that while the overcharging was detectable on the spot and hence companies were issued show-cause notices, the question of quality standards would be dealt with after receipt of laboratory tests and quality analysis from the Hydrocarbon Development Institute of Pakistan (HDIP).

The authority has written to the AJK government that while it was proceeding against the OMCs under the law, the AJK government should “enforce the notified price at the petrol pumps through DCs concerned and take strict action against the defaulting pumps under applicable laws and rules.

A senior executive of an OMC said the oil companies did not have their own petrol pumps in AJK and most of the retail outlets were selling products on their behalf under a licence and trademark. He said the OMCs were coordinating to deal with Ogra notices but they would also get in touch with respective local administrations to proceed against retailers for violation of quality standards and price.

He said OMCs could cancel licence of retailers for earning them a bad name, impose fines and issue warnings.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)