Regulator declares OCAC’s procurement process illegal

ISLAMABAD: The Competition Commission of Pakistan (CCP) has ruled the entire process for procurement of Fuel Marking Company by the Oil Companies Advisory Council (OCAC) as illegal.

The CCP also annulled the invitation for Expression of Interest (EoI) in the Kerosene Marker Programme. The program was announced to help government curb adulteration in different categories of petroleum products mainly the mixing of kerosene oil (SKO) with high speed diesel.

Governments around the world adopt fuel marking scheme as tax administration measure to prevent fraud and smuggling due to unequal tax rates imposed on different kinds of fuels. The move is intended to monitor correct payments of taxes and prevent revenue loss arising from illicit fuel transfer.

The commission’s order issued broad guidelines to all stakeholders including the OCAC, Petroleum Division, the Oil and Gas Regulatory Authority (Ogra) and the Hydrocarbon Development Regulatory Institute of Pakistan (HDRIP) to ensure compliance with the provisions of Competition Act, 2010 while drafting their future tenders as noncompetitive bidding process hampers competition in the market.

The issue was brought to the CCP’s attention by Transparency International which issued a letter to the Ogra chairperson and alleged that the OCAC awarded Fuel Marking Contract for kerosene without any competitive bidding process.

The letter pointed out that tender notice was not floated in any national newspaper and the entire process was managed by the OCAC which identified only six companies who were given the pre-qualification and EoIs.

The letter to the CCP added that a third party consultant was hired to develop instructions for bidders to which only two companies responded but the final bid was submitted by only one firm. As a result, the contract was awarded without tender process.

After considering the preliminary probe, the CCP initiated an enquiry under Section 37(1) of the Act.



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