Islamabad - Senate Standing Committee on Petroleum Tuesday noted that smuggling of Iranian oil was causing loss of Rs60 billion to the national exchequer every year.

Senate Standing Committee on Petroleum that met with Senator Mohsin Aziz in chair, discussed issue of smuggling of Iranian petrol, use of Ron 80-82 petrol in motorcycle and deemed duty on diesel.

However, senators from Balochistan were of the view that smuggling was the only source of income of the people living in border areas and unless those people were provided alternate source of income the government should not curb it.

The committee discussed issue of smuggling of petroleum products in the country with particular reference through Pak-Iran border in Balochistan, the loss of annual revenue and the action taken by the concerned departments to stop the same. The committee was told by PSO that there were no figures with the company as to how much petroleum products were being smuggled through Pak-Iran border. Members of the committee from Balochistan noted that the issue of smuggling needed to be curbed but the ground realities of poverty and employment were also needed to be considered.

However, other members of the committee, were of the view that it was duty of the state to protect its revenue and curb all smuggling attempts.

The committee noted that as per some estimates smuggling from Iran causing losses of revenue between Rs 55 billion to 60 billion a year. Managing Director Pakistan State Oil (PSO) said that it faced losses of Rs25 billion in last 10 months due to petroleum smuggling from Iran to Pakistan.

The committee was told by IG FC Southern Balochistan that in 2042 thousand kilometres area, there are four major roads and there is no government owned petrol pump on the four roads in the area and the porous terrain makes it difficult for custom and FC to check all vehicles. He said matter to curb smuggling fell primarily under the customs department and that department needed to be strengthened and FC will provide all support needed. Eight million litres of illegal oil worth Rs670 million had been apprehended since last year by FC. Fall out of these actions raised public sentiments against the FC because they were poor people and did not have any sources of income other than such transportation of petroleum products.

The committee chairman observed, “Either the argument can be floated that because of the economic underdevelopment of Balochistan province, we should close our eyes to smuggling or we should be wary of the huge revenue loss this smuggling is causing us.”

The committee recommended enhancement of the capacity and human resource of Customs border task force as well as Frontier Constabulary so that the menace of smuggling of petroleum products could be put to an end. At the same time the committee noted that people belonging to low income groups who did not have any other source of income should not suffer due to this due to economic underdevelopment.

A briefing on reintroduction of 80-82 Ron Petrol especially for motorcycle commuters for provision of relief in price to them was also given. The 80-82 Ron Petrol will be 10-12 rupees cheaper than the 90 -92 Ron petrol currently in use.

The proposal of use of RON 80-82 was given by member of Ogra Abdullah Malik. However OGRA Chairperson Uzma Adil made it clear in the meeting that proposal had been floated in personal capacity and did not have ownership or blessing of OGRA. The Ogra chairperson said that member should withdraw his proposal or leave Ogra. Setting the oil standards was a mandate of petroleum division and Ogra had nothing to do with it. Stakeholders of the motorcycle industry, oil refineries and PSO also attended the meeting and expressed reservations on changing from 92 to 82 Ron. The matter was referred to Ministry of Energy and Petroleum Division to invite stakeholders and work on the feasibility of the proposal.

The committee was informed that oil refineries had collected Rs290 billion from consumers on account of deemed duty, an incentive provided by the government for upgrading their plants in an effort to produce higher-grade and environment-friendly fuel. Of this, refineries had invested Rs127 billion on up gradation of plants and efficiencies, Petroleum Division informed the committee.

This deemed duty is a type of support to the refineries by the government, when some senators criticised this support by the government, representatives of the refineries said, “You deregulate the refinery sector, we will not need government’s support then.”

The committee sought implementation status of its earlier direction that the policy of deemed duty should not be for indefinite period to protect the interests of the refineries as well as those of the consumers. The committee was told that deemed duty was to protect and support the industry and not to upgrade it. The ministry told the committee that draft of the new oil refinery policy will be shared with the committee after Eid. The draft will also include a detailed briefing on this matter. The committee was told regarding the matter of reconciliation of petroleum development levy by PSO that the levy was already reconciled and PSO had deposited it.