ISLAMABAD, April 9: The National Accountability Bureau (NAB) is probing into losses worth billions of rupees caused to the national exchequer in the past three years owing to pricing and dumping of petroleum products by petroleum companies. Informed sources told Dawn on Sunday that NAB is questioning a number of petroleum ministry officials to ascertain why the pricing of petroleum products was not transferred to the Oil & Gas Regulatory Authority (Ogra) during the last three years despite a binding decision of the federal cabinet in June 2001. The said cabinet meeting, it may be mentioned here, was presided over by President General Pervez Musharraf.
NAB, the sources said, was also looking into circumstances that led to closure, in December 2004, of the second phase of an enquiry into dumping of petroleum products for more than five years by petroleum companies despite the fact that misuse of freight pool and avoidance of sales tax payment had been proved and responsible people identified by a committee in the first phase of the enquiry.
Petroleum Ministry Secretary Ahmad Waqar and spokesman Shaukat Hayat Durrani were not available for comments. NAB has got hold of relevant record of the ministry and is currently scrutinizing it, the sources said.
They said that on June 13, 2001 the federal cabinet had decided that responsibility of fixing prices of POL products would be shifted to Ogra on its coming into existence. However, this was not done despite the fact that Ogra was established in March 2002.
Besides, a number of other relaxations allowed to the refining sector for three years ending 2003 for improvement of infrastructure also continued unabated.
The sources said the exact amount of losses caused to the national exchequer would run into hundreds of billions of rupees over the last six years.
The Ministry of Petroleum, said the sources, has been asked to justify as to who, and why, allowed inclusion of Petroleum Development Levy (PDL) in base price for the purpose of calculation for marketing margins and retailer margins.
The ministry would also have to explain if there was precedent anywhere in the world where profit of an oil company is calculated after inclusion of taxation in the price.
NAB is also examining as to how pricing of motor spirit was being done on the basis of naphtha instead of motor spirit and why the pricing of this product was based on import parity price despite the fact the country was self-sufficient in this particular area. The ministry has also been asked to justify why the companies were allowed to charge premium on products which did not fall in the category of premium quality.
NAB believes that profits of the petroleum marketing companies and refineries increased by up to 500 per cent due to these technicalities and inventories while the ministry looked the other way.
The sources said NAB has also exchanged views with Ogra high ups on the subject and about the steps the regulator was planning to improve the situation when it starts price fixation from April 15, 2006.
