Inquiry questions petroleum compensation mechanism
The Federal Investigation Agency has alleged that several oil marketing companies received government compensation payments for petroleum stock that had not yet been imported into the country. According to an interim inquiry conducted by FIA’s Anti-Corruption Circle Karachi, flaws in the existing Price Differential Claim mechanism may have enabled companies to secure payments without facing actual financial losses.
Investigators found that authorities calculated compensation using fuel sales volumes instead of confirming whether companies had imported petroleum products or purchased fuel after revised prices took effect. As a result, firms allegedly claimed compensation on cheaper fuel already stored in tanks or imported before official price increases.
Furthermore, the inquiry stated that companies may have benefited financially from payments intended to offset market losses linked to rising petroleum prices. Officials argued that the existing mechanism failed to accurately measure actual exposure to international oil market fluctuations.
Meanwhile, investigators identified possible weaknesses in verification procedures used by the Oil and Gas Regulatory Authority. The FIA claimed authorities processed claims without properly examining stock positions or validating import records before approving compensation amounts.
Officials suspect coordination and financial irregularities
In addition, the inquiry suggested possible coordination between regulatory officials and policymakers within the Petroleum Division. Investigators alleged that inadequate oversight allowed companies to claim amounts exceeding their actual expenditures.
The FIA recommended revising the compensation formula by linking payments directly to refinery purchase prices instead of relying on sales-based calculations. Officials explained that refinery rates more accurately reflect real market exposure tied to international petroleum benchmarks.
Moreover, several companies reportedly appeared to have received compensation greater than their verified costs under the current system. Authorities compiled the findings after conducting interviews, interrogations, and detailed analysis of financial records during an eight-day inquiry.
However, proceedings remain suspended after the Sindh High Court halted the investigation following a legal challenge filed by one oil marketing company. Officials have not confirmed when the inquiry will resume or whether further action will follow.
