Transportation of POL products: PM seeks explanation for ignoring PR, PNSC

Prime Minister has sought an explanation from Secretary Petroleum Division for not giving priority to Pakistan Railways (PR) and Pakistan National Shipping Corporation (PNSC) in transportation of POL products, well-informed sources told Business Recorder.

These directions were issued during a recent meeting of Federal Cabinet, when at least two Ministers lodged a complaint that Pakistan State Oil Company Limited (PSOCL) is not giving weightage to instructions of Federal Cabinet in transportation of POL products.

The Cabinet was informed that PSO was a public sector limited company under the administrative control of the Ministry of Energy (Petroleum Division). It was governed by the marketing of petroleum products (federal control) Act, 1974 which provided that the Federal Government may set up a Board of Management (BoM) to control, manage and direct the affairs of the marketing company.

The current BoM of PSOCL was constituted on February 21, 2019, including the Secretary, Power Division as its ex-officio Director. However, on January 25, 2021, the Secretary, Power Division tendered his resignation from the Board, owing to his official commitments, with the request for reconstitution of the Board by replacing his nomination with “representation of the Power Division not below BS-20”.

According to the Petroleum Division, PSOCL was importing LNG from Qatar Gas, which was mainly supplied to power plants. The Company was also the largest supplier of Furnace Oil (FO) to various power plants across the country to meet their requirements. In the event of a shortage of alternate fuels and upon demand from the Power Division, PSOCL was to import furnace oil on an emergent basis to overcome power shortage in the country.

Petroleum Division maintained that the demand and supply of these fuels, as well as, its price directly impact the power sector. PSOCL was also on the receiving end of circular debt from the power sector companies, which at present, stands at approximately Rs180 billion.

Petroleum Division maintained that the issues could be addressed in a better way by establishing close coordination and liaison between PSOCL and the Power Division.

In order to ensure representation of the Power Division on the BoM of PSOCL, the Petroleum Division proposed that the suggestion of Secretary, Power Division may be supported and he be replaced in the Board by a division/representative not below BS-20.

During discussion, Minister for Railways, Senator Azam Swati, who is already conducting an inquiry into gas crisis in the country due to mismanagement of dry docking of M/s Engro LNG terminal, complained that PSOCL has discontinued transport of POL products through Pakistan Railways.

Minister for Maritime Affairs, Ali Zaidi, pointed out that despite repeated directions of the Cabinet, the first right of refusal was not being sought from Pakistan National Shipping Corporation (PNSC) by the PSOCL for transporting POL imports. He contended that engaging foreign shipping companies results in use of precious foreign exchange reserves.

Differences between Minister for Planning, Development and Special Initiatives, Asad Umar and Minister for Maritime Affairs, Ali Zaidi, with SAPM on Power and Petroleum Tabish Gauhar are not a secret any more. Some insiders in the Ministry of Energy argued that there is a possibility that Tabish Gauhar will be asked to tender resignation during a press conference as was the case with Nadeem Babar. While exhorting that the national entities must be given priority, Prime Minister Imran Khan directed Secretary Petroleum Division to submit a report on the reasons why services of Pakistan Railways and PNSC were not being utilized by PSOCL.

The Federal Cabinet directed the Secretary Petroleum Division, Dr. Arshad to submit a report, explaining why services of Pakistan Railways and PNSC were not being utilized by the PSOCL to the Prime Minister’s Office immediately.

After detailed discussion on the proposal titled ‘alteration in the nomination of Secretary, Power Division as a Director on the Board of Management of PSOCL’ it was approved.

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