2020 petroleum scandal: FIA arrests high-ranking officials of OMCs, OGRA, energy ministry

• FIA arrests various high-ranking officials of oil marketing companies, OGRA and Ministry of Energy in connection with 2020 petroleum scandal.
• FIA Lahore registers fresh cases against them after findings of a probe report into 2020 petrol crisis hinted at alleged role in scam.
• Nominated accused in FIRs include former OGRA chairperson Uzma Adil Khan, former member finance Noor-ul-Haq and others.  

LAHORE: The Federal Investigation Agency (FIA) Saturday apprehended various high-ranking officials of oil marketing companies (OMCs), OGRA and Ministry of Energy and Petroleum over their alleged involvement in the 2020 petroleum scandal, The News reported. 

The FIA Lahore chapter registered fresh cases against them after the findings of a probe report into the 2020 petrol crisis hinted at their alleged role in the scam. The cases have been registered against two oil marketing companies, including Askar Oil Services and Fossils Energy Pvt Ltd, along with OGRA and the ministry of energy officials.

The nominated accused in the FIRs include Uzma Adil Khan (former chairperson Ogra), Noor-ul-Haq (former member finance) and Abdullah Malik (former member oil) of Ogra and their subordinates, Dr Shafi-ur-Rehman Afridi (former DG oil) and Imran Ali Abro (RO) of MoEPD, Noorul Haq (former member finance), Amir Naseem (former member gas), directors of Askar Oil Services, Sohail Nasim, Shakeel Nasim and Mohammad Shahzad Anjum and Fossil Energy Pvt Ltd CEO Nadeem Butt and others.

After the registration of the cases, FIA Lahore has made five arrests, including of Fossil Energy Pvt Ltd CEO Nadeem Butt, Oil and Gas Regulatory Authority (Ogra) Member Gas Amir Naseem, Ogra Member Oil Abdullah Malik and DG Oil of the Ministry of Energy and Petroleum Shafiullah Afridi and Assistant Director Oil Imran Abro. The FIA has registered two FIRs against the officials and others, copies of which are available with The News.

According to the FIRs, the FIA has accused them of awarding petroleum marketing licenses illegally, allowing illegal petrol import quota. Moreover, the oil marketing companies, after getting their marketing licenses, established several illegal petrol pumps, which caused a loss of billions of rupees to the national kitty.

The FIRs read that the Federal Cabinet in April 2021 had asked the FIA to probe the matter of the petroleum crisis by ascertaining the facts and circumstances, which resulted in the petrol crisis during June 2020.

The FIA findings according to the FIRs reveal that since July 4, 2005, after acquiring licence from the Ministry of Petroleum and Natural Resources, Askar Oil Services Pvt Ltd has been granted eight extensions to-date by Ogra irrespective of the fact that the mandatory storage requirement of 9,100 tonnes of MS Petrol and 12,100 tonnes of HSD was never developed by Askar Oil Services.

It further said that even after the promulgation of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016, a 7th and 8th extension was also granted by the Ogra to the Askar Oil marketing company on January 3, 2017 and on January 5, 2018, respectively, in violation of the rules, which makes it mandatory for the regulatory authority to validate the steps undertaken by the oil marketing company (OMC) towards the development of 20-day storage facility.

However, the accused OMC failed to deliver its commitment submitted in 2005. In criminal complicity between the Askar OMC and Ogra, all the graft sales by the accused OMCs originated from illegal extensions granted by Uzma Adil Khan (chairperson), Noorul Haq (member finance), Amir Naseem (member gas) and Dr Abdullah Malik (member oil) and their predecessors.

Further, the OMC illegally established a massive network of retail outlets in flagrant violation of the legal requirement to develop a 20-day storage facility proportionate to the volume of sales. The FIA probe revealed that, as per the record provided by the accused OMC, it has 390 retail outlets, which itself conflicts with the figures submitted by the Department of Explosives, numbering its operational retail outlets at 1,019.

This is criminal concealment on the part of the accused OMC. Moreover, the said OMC continued illegal operations which was never possible without the collusion of the officials of Ogra, the FIA claimed.

In reality, Askar Oil Services Pvt Ltd could only maintain stocks having a cover of four days against the mandatory requirement of 20 days cover in the month of June 2020 when the country was facing a petroleum crisis which is a clear violation of the licensing condition, the FIR read.

Moreover, during the period from January-June 2020, the OMC never maintained the requisite minimum stock in collusion with the Ogra officials, which is a necessary requirement as per the licence condition issued by the OGRA.

During the probe, the daily stock position of Askar was also checked and it showed that they had a substantial stock of almost 20 million litres of MS Petrol at the start of June 2020.

The data provided by Askar Oil showed a dip in stock by 6.8 million litres on June 2, 2020, of which there exists no evidence of product exchange.

Further, Askar Oil had 6.5 million litres of MS Petrol in stock at the end of the month, which they chose to hoard and did not supply to their outlets.

In the case of high-speed diesel (HSD), the total stock in hand and intake from the refineries amounted to almost 18 million litres, while their supply was only 0.82 million litres, while the rest was hoarded. The illegal benefit of this amounts to Rs693 million.

In addition, the supply shown was fudged, the owners of petrol pumps gave statements that they have received no or very little supply.

Askar OIl showed a supply of 781,368 litres to these petrol pumps, while they have given an affidavit of receiving only 46,987 litres in total. Resultantly, the actual quantum of illegal benefit is far more than the above amount and will be ascertained during investigation.

The above-mentioned illegalities explicitly reflect the abuse/misuse of the official position by the public servants concerned of Ogra, along with Askar Oil Services Pvt Ltd (the beneficiary in obtaining unlawful gain as abettor).

The FIRs claimed that the Askar has since long been in the practice of maintaining fudged supply figures, while the actual imports are illegally sold to illegitimate vendors under the patronage of the regulatory authority. The crime proceeds so obtained are being used in money laundering.

Regarding the probe against OMC Fossil Energy, it revealed that the provisional licence issued by the regulatory authority to the said OMC on September 9, 2017, according to which the OMC was under legal obligation to complete their infrastructure, including the construction of storages and retail outlets within a period of three years before commencing marketing of the petroleum products. However, the company failed to do so but Ogra by abusing their official position as a public functionary in connivance with Fossil Energy acted otherwise and illegally granted permission for the marketing of petroleum products to the OMC on September 19, 2012.

It was further revealed that Fossil Energy was granted permission to import 1,000 tonnes of MS petrol in the product review meeting held on March 1, 2020, under the chairmanship of DG oil, the Ministry of Energy and Power Division while the OMC had no retail outlets. Similarly, the allocation made lacks any logical justification and without any avenue to market, the import will only be sold illegally. Fossils Energy Pvt Ltd was allocated 4,700 tonnes import quota on different occasions and they uplifted 21,000 tonnes from the local refineries from February 2020 to September 2020.

In total, they sold 32 million litres of MS Petrol and HSD, despite having no retail outlets, while gaining a profit of at least Rs 90 million.

The probe found that no sale record was provided to Ogra. The said OMC dumped and sold more than 25,823 tonnes of refined petroleum products on retail outlets belonging to other OMCs or operating illegally, the FIA claimed.