20000211

Body to draw

new guidelines for POL

distribution system

ASHRAF KHAN

KARACHI: The federal government has formed a committee, comprising officials from the three Oil Marketing Companies (OMCs), to draw guidelines for a new procedure in place of the existing oil distribution system in the country.

As part of its deregulation plan of the petroleum sector, the government is willing to abolish Freight Pool Plant (FPP) Ñ a 30-year-old petroleum distribution system that has been causing financial loss of about Rs. 8-10 billion annually to the exchequer as well as the OMCs, sources said.

Based on the outcome of the committee's report, further action would be taken on fast track-basis, sources said.

On the supply side of the petroleum product, the government adopted that the FPP in 1967 that is still one of the major issues for the industry to face, they said. The ever-increasing freight pool bill paid for by the government comes around Rs. 18 billion, while bringing no incentive to any one to be efficient. Rather, they said, it encourages misuse.

A lobby, minting money out of it, had been proactive to forestall any move towards terminating the FPP, sources said.

Under the existing deficient infrastructure for inland petroleum haulage about over 15,000 lorries of all shapes and sizes are engaged in transportation and delivering products all over the country since current railway facilities are woefully inadequate. Another important factor that prevents the planners from proceeding with their idea of terminating the FPP, is the product price parity all over the country.

Sources said that the OMCs have a plan for substituting the FPP by maintaining country wide price parity.