PESHAWAR – Prime Minister Imran Khan’s government is under new fire over reputed foul play in the oil industry that price-gouged consumers and promoted rampant smuggling, revelations the political opposition is echoing to ramp up its calls for Khan’s ouster.
Established in July under court order, the Inquiry Commission found last week that the Petroleum Ministry had created an “artificial shortage” of oil in June when global prices were falling as the Covid-19 pandemic pounded global demand.
The commission also unearthed US$1.5 billion worth of related oil smuggling over the Pakistan-Iran border at Taftan in Balochistan province in reputed collusion with the Frontier Corps (FC) paramilitary force and Pakistani customs authorities.
Additional Director General Federal Investigation Agency (FIA) Abubakar Khudabaksh, who headed the five-member Inquiry Commission, has recommended strict action should be taken against the Petroleum Division of the Oil & Gas Regulatory Authority (OGRA), Director General Oil (DGO) and private oil marketing companies (OMCs).
The commission’s report suggested that OGRA was out of touch with various ground realities of the oil trade and should be dissolved through an act of parliament. The report also questioned the role of the Petroleum Ministry in the coordination of various organs in its petroleum division.
The opposition smells blood in the water. Maryam Nawaz, vice president of the Pakistan Muslim League-Nawaz (PML-N) and daughter of PML-N head and ex-premier Nawaz Sharif, wrote in a tweet last week:
“The report on the oil crisis confirms what we already knew. It was a direct result of the selected incompetence, poor decision-making and above all corrupt practices. This is exactly why he [Khan] needs to go and is [already] on his way out,” she wrote.
Whether the emerging scandal is enough to bring down Khan’s government still seems doubtful, particularly considering how his administration has blunted previous price scandals that threatened to redound on his ruling Khan’s Pakistan Tehreek-e-Insaf (PTI).
In July, the Lahore High Court recommended at a hearing the creation of a commission to probe what it observed as “the simulation of a shortage by the oil mafia for monetary gains.” The government, the court maintained, increased petrol prices before the scheduled time specifically to benefit OMCs.
The FIA-led inquiry commission submitted a 155-page report to the prime minister last week.
True to bureaucratic form, Khan set up a three-member Cabinet committee comprised of Minister for Planning and Development Asad Umar, Human Rights Minister Shireen Mazari and Education Minister Shafqat Mehmood to review the report and submit its recommendations for further action.
Critics note this is the same way Khan handled previous inquiry reports on alleged foul play in the wheat, sugar and medicine sectors, all of which went through a chain of investigations and forensic audits but resulted in no punitive measures.
PML-N Senator Pervaiz Rasheed told Asia Times that Khan frequently delays the implementation of inquiry report recommendations by forming committees on top of committees to linger on the process of the probe until the case falls from public view.
“The fate of this oil investigation committee will not be different from the outcome of previous committees, which faded into oblivion during the lethargic process of investigations over investigations,” Rasheed added.
Without directly identifying the accused, the Inquiry Commission provisionally held Khan’s cabinet member responsible for “lack of coordination among departments” working under the ministry’s petroleum division and allowing OMCs to engage in illegal practices in a “business as usual” manner.
The supply chain mechanism, the report claimed, was manipulated to help escalate oil prices in the country and pass the burden of over 8 billion rupees ($50 million) on to consumers in early June, when the price of oil fell over 50% on international markets.
The report also revealed that 240 billion rupees ($1.5 billion) worth of oil was smuggled into the country through the Taftan border area with the apparent connivance of paramilitary and customs authorities.
“The question arises as to how such a huge amount [of petrol] gets across the Taftan border and further across the country despite the presence of multiple agencies working to curb this menace,” the commission’s report asked.
The inquiry report revealed more specifically that smuggled oil was brought in 50,000-liter tankers via road and not on the bare backs of mules or humans. It recommended a deeper probe into the smuggling issue with particular reference to the “dubious function” of BYCO Refinery, a private firm involved in Balochistan province’s oil business.
Khan’s PTI-led government has been accused of multiple financial scams since it assumed power in October 2018 only to emerge unscathed.
The premier has passed the blame vaguely to “mafias and cartels” for the manipulation of medicine, sugar and wheat prices, but critics say those suspected of cartel-like bad behavior are often associated with his so-called “kitchen cabinet” and even hold public office.
A similar surge in medicine prices in 2019, where life-saving and other drugs rose anywhere between 100% and 300% – more than the limit permitted by official drug pricing policy –lacked supply and demand justification and put treatments out of reach of many Pakistanis.
Amid a public uproar, the government removed the then-federal health minister, Amir Mehmood Kiani, and the National Accountability Bureau (NAB) thereafter launched an investigation into surging medicine prices. However, neither the NAB’s investigation nor the PTI’s probe into the price hikes acted to reduce the prices.
Kiyani was later elevated to PTI’s central secretary general position within months of losing his ministerial post amid the scandal.
In mid-January this year, an acute shortage of wheat similarly hit the country when flour millers raised prices and bakers went on strike against selling bread at the previous lower prices.
In late January, the federal government formed a four-member committee headed by FIA Director General Wajid Zia to probe the situation. The committee members were drawn from the Intelligence Bureau (IB), the director-general of Punjab Anti-Corruption Establishment and a member selected by the FIA DG.
The assembled committee was later assigned the task of looking into the sugar crisis as well, which hit the country at a time the wheat crisis was still ongoing.
The inquiry reports into both scams, which opposition parties claim cost consumers over 400 billion rupees ($2.5 billion), raised more questions about the integrity of those in charge of the probe, including Federal Food Minister Khusro Bakhtiar, PTI senior leader and sugar baron Jahangir Tareen and Chief Minister Punjab Sardar Usman Ahmad Khan Buzdar, than it did answers about the alleged price manipulations.
Their final analysis merely stated the obvious in saying that the crises would push up the fiscal deficit and food inflation, and have adverse impacts on farmers due to subsequent cheaper imports of sugar and wheat.
“The medicines inquiry has vanished in the thin air, followed by the wheat and sugar inquiries,” said Rasheed. “The end objective of these investigations has always been to protect the real culprits and mafias sitting in the cabinet,” he claimed.