Investigation into Rs135b fuel scam begins

Islamabad:

In a bid to free over 800 tankers carrying highly flammable adulterated petrol, the government has set up a commission of inquiry to probe the Rs 135 billion scam related to the importation of hazardous petrol as an industrial chemical.

The committee has been given one week to finalize its recommendations and assign responsibility for the illegal importation, according to a statement. This seven-member investigative committee was formed only after the intervention of the prime minister’s office.

The committee will investigate the illegal import, clearance and sale of Light Aliphatic Hydrocarbon Solvent — a hazardous petroleum product — in violation of the Petroleum Act 1969 and the Petroleum Rules 1937, according to the notification issued by the Petroleum Division three days ago. The committee will be chaired by Additional Secretary Petroleum Hasan Mehmood Yousufzai and its members include representatives from Pakistan Hydrocarbon Development Institute, Engineering Development Board and Pakistan Customs.

The commission has been tasked with uncovering the facts of the fraud, making recommendations and fixing responsibility within seven days, the notification showed. He has already held a few meetings.

The Express Tribune reported on Sunday that the government has unearthed a massive Rs 135 billion scam involving the importation of a highly flammable and dangerous petrol lead, marketed as premium petrol. This solvent, mixed with petrol, has caused significant damage to car engines and has resulted in financial losses to both consumers and the national exchequer.

Customs Intelligence first discovered the scandal in May, but it remained hidden in official files until July 29, when the prime minister’s office stepped in and ordered an immediate halt to the illegal activities.

As a result of the July 29 order, some 807 tankers carrying the flammable fuel are now stuck in the Dry Port. Of the 807 tankers, 160 are Iranian tankers also stuck at the port, according to the Federal Board of Revenue (FBR). The importers, operating through the Taftan-NLC Dry Terminal, were bringing in the light aliphatic hydrocarbon and selling it as gasoline with the alleged complicity of customs officials and laboratory staff, according to official documents.

On Tuesday, the FBR’s Customs Operations member told the Senate Standing Committee on Finance that the law requires an import permit for the solvent, a requirement that was not met until the Customs Service exposed the issue and the prime minister’s office intervened.

The government is under pressure to release the stuck cargo by relaxing legal requirements. Outgoing FBR chairman Malik Amjad Zubair Tiwana informed the standing committee that the matter was referred to a three-member ministerial committee through the commerce ministry.

The FBR wrote to the commerce secretariat on Monday, stating that, being a petroleum product, the solvent cannot be imported without an import and storage permit. This stance is also supported by the petroleum department. The FBR had earlier allowed imports on the basis that the import policy order of 2022 did not specifically restrict or ban the solvent.

The FBR noted that the solvent was included as a petroleum product in the Petroleum Products Development Surcharges Ordinance, 1961, but was subsequently removed through a statutory regulation.

Currently, solvent clearance has stopped and the 807 tankers are stuck at NLC Dry Port Quetta. The Quetta Chamber of Commerce and Industry has sought temporary clearance of the pending shipments as the clearance may take up to three months. However, the FBR refused to clear the tankers under commitments and sought a one-time waiver from a ministerial committee.

The Commerce Department, however, refused to support the liquidation. “Light Aliphatic Hydrocarbon Solvent is not covered by the Import Policy Order and therefore does not qualify for consideration of a one-time exemption,” the commerce ministry informed the FBR.

The ministry suggested that if the FBR deems it appropriate, the matter could be referred to the Ministry of Power for a decision under the relevant rules. Alternatively, a legal opinion could be sought from the Legal Department on the future course of action.

There is also the prospect that existing importers will have to receive a one-time benefit, possibly allowing their 807 tankers, while future imports will have to comply with the new licensing requirements.

Over two years ago, imports of this solvent were only 28,000 metric tonnes, but this figure rose to 385 million tonnes during the July-May period of last financial year. According to the Customs Information, about 900 million liters of adulteration was imported in less than three years, resulting in losses amounting to Rs 135 billion.