Here’s Why There Was a Petrol Shortage in Pakistan

Recently, we witnessed a petrol shortage as Oil Marketing Companies (OMCs) closed fuel pumps across Pakistan due to shortage of supply.

Apparently, the government is at fault.

The situation started worsening in late April and remains unresolved till date.

OGRA, in a statement issued to media, said that OMCs are responsible for creating the shortage and that the authority has proof. It further said that six OMCs were issued show-cause notices while another two were being investigated for hoarding petroleum products and will be charged as per the law.

After digging deep into the situation, it appears that OMCs were not at fault. Instead, fuel shortage was due to bad estimations from the government’s end.

While there are a lot of technicalities involved, in a layman’s terms, the government of Pakistan capped OMCs to cancel their import orders on March 25, 2020.

According to a letter, posted below, the move was apparently due to lower demand amid Coronavirus lock-downs.

OMCs were instructed to get their fuel from local refineries as low demand (and after import) these local (mainly govt owned) refineries would be out of orders.

After the above directions, in which OGRA is copied, oil marketing companies canceled their import orders and decided to rely on local refineries to meet demand.

According to details available with ProPakistani, Shell Pakistan on 20th Feb, 2020 signed an import order for 55,000 Metric Tonnes (MT) per month of 92 RON Motor Gasoline (Mogas) to be delivered in March, April and May 2020.

After the above order, which directed OMCs to cancel planned imports from April 2020 onward, Shell Pakistan canceled the order, taking out approximately 83,000 MT of fuel from the system which would have otherwise been available at the beginning of June.

The situation changed and petroleum demand increased in the country in April. At this time, OMCs were supposed to rely on local refineries, which cut short their output due to price differential of crude oil.

Due to the above reasons, petrol was short in the country by the end of April and as per our sources, oil marketing companies were consistently communicating their inventory details with the OGRA and Ministry of Energy.

In fact, in one communication, OMCs clearly communicated to the ministry that their inventory would dry up in less than 8 days.

In May 2020, the government lifted the ban on import of fuel for OMCs and that’s when they placed fresh orders. Not to mention, oil tankers take a lot of time to reach Pakistan after orders are placed.

Shell Pakistan, for instance, placed an order during the second week of May and the tanker reached Pakistan on June 8th, 2020. As of now, the tanker is being off-loaded and fuel from it will be supplied across the country.

Clearly the situation was created due to bad estimation of the government — as they thought demand would shrink due to Coronavirus lock-downs. However, lock-downs were lifted and the demand surged.

While it can be said that the situation was uncertain enough and estimates can be wrong, the real culprit behind fuel shortage were clearly not the OMCs.


    • It is because of the mass mismanagement of the previous governments. Why Imran Khan should fire his own ministers?. Also please give him time. If you can tolerate Nawaz Sharif and Bhuttos for 30 years then please give Imran Khan atleast 10-15 years to bring everything in order.
      Thanks

  • I think this is due to the latest scheme by the military establishment to play a “throw under the bus” for Khan as they control the conditions to let Khan’s popularity dip and make him hated in the masses. Though I still believe that he is not very competent or bright, his team lacks the accumen aswell but he is been put into condition that are beyond his comprehension.

  • Why not the author has shared proof of conversations b/w OMCs & the ministry if they were telling their inventory (& xpected shortage) to the concerned officials. Also no proof is given by the author that the restrictions were lifted off in May, as according to govt. OMCs were allowed to import oil in early April!!!!

  • I think it’s a case of commercial greed; a battle between Refineries and OMC’s as to who avails “Intl price advantage”? Financials of OMC’s are better than Refineries since they always manage to get the approval of Refined Oil imports by “mili bhagat” with M/o Energy.

  • “Refined Oil” import permission should be restricted to Govt. owned refineries and OMC (PSO) so that forex control and price control is properly ensured by GoP and corrupt practices are disabled in M/o Energy.


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