Ogra’s threat to cancel PSO licence

[Lahore_Real_Estate]

By Khaleeq Kiani
ISLAMABAD: The Oil & Gas Regulatory Authority (Ogra) has warned Pakistan State Oil — the country’s largest oil supplier — of cancelling its marketing license if it failed by end of this month to pay penalties for hoarding oil products in anticipation of price hike.

“If the company fails to pay penalty before May 31, the Ogra has the powers under the rules to revoke permission issued to PSO to sell petroleum products after fulfilling procedural requirements,” a source close to Ogra chairman told Dawn on Tuesday.

The Ogra has issued final notice not only to the PSO management but also all members of its board of directors.

The sources said the Ogra had imposed Rs 925,000 penalty on PSO in March this year for selling petroleum products in short supply or at prices much higher than notified by the company at its website. They said a number of other companies were also found involved in the same practice and were imposed penalties.

The sources said that private marketing companies paid the penalties and hence their names would not be made public. However, the PSO was taking advantage of its position of being a state-owned entity and refusing to pay the fine that would set a bad precedent for other companies to ‘disobey’ the market regulator.

“You are hereby informed that this is your final notice to deposit the penalty within 15 days of issuance of this notice; otherwise the Ogra reserves the right to adopt other course of action available under the law, besides initiating the proceedings for recovery of fine as arrears of land revenue against you and each director of your company”, the notice issued on May 12, said.

The Ogra said it conducted surprise inspection of PSO’s retail outlets on December 31, 2009 and January 1, 2010 in which it found 33 retail outlets “either deficient in stocks or charging prices over and above the notified prices”. The explanation provided by PSO was found unsatisfactory when a show cause notice was issued to the company.

Consequently, the PSO was imposed a penalty of Rs925,000, which it did not deposit in 30 days as required under the law.

“Therefore, you have committed wilful and unreasonably prolonged default in complying with the decisions/direction of the authority… hence found in violation of rule 33 (1)(a) of the Pakistan Petroleum (Refining, Blending and Marketing) Rules 1971,” the notice said.

Under the said rule, the Ogra had the powers to revoke permission to a marketing company to do business.

“It is not easy to cancel PSO’s marketing licence. Ogra is trying to get out of its skin”, a source in the PSO said.

The sources said PSO had challenged the issue at the appropriate government forum and the government would be hearing arguments of the both sides on Thursday. They said policing of the outlets fell under the regulator’s enforcement responsibility that it had failed to perform.

A PSO spokesperson said that at one point some of its stations were short of supplies because of short deliveries by refineries amid inter-circular debt that was not in PSO’s control.

The spokesperson said the Ogra had been told that it was collecting penalties from the outlet owners for overcharging and this would be deposited to the Ogra.

On its part the company was doing its best to control this menace because it also caused revenue loss to the company and hence it should not be asked to pay penalties.