LAHORE: The Federal Investigation Agency (FIA) Lahore has registered separate cases against two oil marketing companies (OMCs), Askar Oil Services and Fossils Energy Pvt Ltd, and arrested five officials; following inquiries in the petroleum crisis of June 2020, BOL News has learnt.
According to the FIA officials, 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 have been arrested so far.
The arrests were made after the FIA conducted inquiries in the petroleum crisis on the directives of the Federal Cabinet.
According to the FIA, the Ogra officials were allegedly involved in the issuance of illegal petroleum marketing licences, while the officials of the Ministry of Energy and Petroleum Division were allegedly involved in the issuance of illegal petroleum import quota.
The FIA also said the petroleum marketing companies had set up a network of more illegal petrol pumps across the country than the Ogra’s approved petrol pumps with the alleged connivance of the authority.
The officials are accused of colluding with the illegal petroleum marketing licences, illegal petroleum import quotas and buying and selling of illegal petroleum imports, causing loss of billions of rupees to the national exchequer and money laundering of billions of rupees, it said.
The Federal Cabinet vide a letter dated April 23, 2021 had asked the FIA to probe into the matter of petroleum crisis by ascertaining the facts and circumstances, which resulted in the crisis in the country during June 2020.
According to the FIA, 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 the 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.
“Even after the promulgation of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016, 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 Rule 35 (2) and (3), which makes it mandatory for the regulatory authority to validate the steps undertaken by the OMC towards the development of 20-day storage facility.”
Still, the accused OMC has 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.
According to the FIA, 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 mere fact is criminal concealment on the part of the accused OMC. Continued illegal operations by the said OMC was never possible without the collusion of the officials of Ogra, which could have easily halted the marketing of the said OMC by revoking its licence.”
The FIA said in clear violation of the licensing condition, the accused OMC 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.
Even during the period from January-June 2020, the FIA said, 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.
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 the 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 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.
According to the FIA, Askar 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 abovementioned 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).
As per the FIA, the record made available showed that Askar has since long been in 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.
In view of the above, prima facie, the offences punishable under section 420,468,471, 109-PPC and Section 5 (2) 47 PCA and Section 3/4 of the Anti-Money Laundering Act 2010 have been committed by the OMC and the public servants/officers concerned of Ogra.
Accordingly, on the permission of the competent authority a case is registered against Uzma Adil Khan (former chairperson), Noorul Haq (former member finance), Amir Naseem (former member gas), Dr Abdullah Malik (former member oil) of Ogra and their subordinates, who were found involved and the directors of Askar Oil Services, Sohail Nasim, Shakeel Nasim and Mohammad Shahzad Anjum, while the predecessors of the panel of Ogra who supported these malpractices of illegal extensions would also be probed during the investigation.
The investigation of the case has been entrusted to FIA assistant director Muhammad Javed Sultan. Similarly, the FIA, pursuing the directives of the Federal Cabinet Division vide letter dated April 23, 2021, has registered another FIR against the Fossil Energy Pvt Ltd and Ogra officials.
As per the provisional licence issued by the regulatory authority to Fossil Energy Pvt Ltd on September 9, 2017, the OMC was under legal obligation to complete their infrastructure, including construction of storages and retail outlets within a period of three years before commencing marketing of the petroleum products.
But, according to the FIA, in clear disregard to the terms of the provisional licence, Fossil Energy failed to deliver on its plan to complete its infrastructure. Instead of taking note of this failure, Ogra by abusing their official position as a public functionary in connivance with Fossil Energy acted otherwise and illegally granted permission for marketing of petroleum products to the OMC on September 19, 2012.
The FIA also said 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.
At that point in time, the OMC had no retail outlets as per the record of Ogra and Explosives Department. Similarly, the allocation made lacks any logical justification and without any avenue to market, the import will only be sold illegally.
“It is also worth to note that the permission was granted illegally by the DG oil on the very day i.e., 11.03.2020 when the parcel of the OMC was discharged at the port.”
The import orders are only placed after obtaining import permission in the product review meeting, much prior to the actual import delivery.
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 Rs90 million illegally (based on OMC margin as per the pricing formula). No sale record was provided to Ogra. They dumped and sold more than 25,823 tonnes of refined petroleum products on retail outlets belonging to other OMCs or operating illegally.
These facts manifestly demonstrate that Fossils Energy committed these flagrant illegalities in collusion and collaboration with the officers/officials concerned of the Ministry of Energy, which resulted in unlawful gains by the OMC and deprived the rightful OMCs.
The FIA also maintained that during the proceedings, it has also emerged that Fossils Energy has since long been in practice of maintaining fudged supply figures, while the actual imports of the petroleum products are illegally sold to illegitimate vendors.
The crime proceeds so obtained are being used in money laundering by the management of Fossil Energy Pvt Ltd.
“In view of the above, prima facie offences u/s 420, 468, 471, 109-PPC, R/w 5 (2) 47 PCA and Section 3/4 of [the] Anti-Money Laundering Act 2010 have been committed by the Fossils Energy Pvt Ltd and the public servants/officers concerned of Ogra and the MoEPD.”
Accordingly, on the permission of the competent authority a case has been registered against Uzma Adil Khan (former chairperson), Noor-ul-Haq (former member finance) and Abdullah Malik (former member oil) of Ogra and their subordinates, who were found involved, Dr Shafi-ur-Rehman Afridi (former DG oil) and Imran Ali Abro (RO) of MoEPD.
Similarly, the FIR has been registered against Saleem Butt, Nadeem Butt and Nazia Malik of Fossils Energy Pvt Ltd, while the role of other involved persons will be determined during the course of investigation.
FIA assistant director Nasir Mahmood Awan has been appointed as the investigation officer of the case.