FIA intervenes after commercial banks refuse to extend credit limits to OMCs, refineries

ISLAMABAD: After commercial banks show reluctance to extend credit to oil marketing companies (OMCs) and refineries, the Federal Investigation Agency (FIA) has intervened and assured support to the commercial banks in doing the banking operations with OMCs.

Following the initiation of an investigation by the FIA against the officers of the National Bank of Pakistan (NBP) allegedly involved in facilitating M/S Hascol Petroleum Limited with malafide intention, the banks had refused to extend credit limits to OMCs, refineries of the country. However, now the FIA has stepped in and assured the commercial banks that the agency’s investigation should not be a concern to those not guilty of misconduct/breach of trust.

Amir Farooqi, Director, FIA, in a letter dated March 18, 2022 to the Presidents of all commercial banks of Pakistan relating to the review of banking operations with Oil Marketing Companies (OMCs) said that that FIA Sindh Zone I is conducting a criminal investigation against officers of the National Bank of Pakistan (NBP) who are government servants/ Bankers involved in facilitating M/S Hascol Petroleum Limited with malafide intention resulting in loss of billions of rupees to the bank through malpractices.

According to a letter of the Director, FIA, the investigation conducted so far reveals criminal negligence on the part of the bank to follow prudent banking practices. Basic purpose of the investigation is to fix responsibility and ensure conviction of those involved in criminal acts. Further, to obviate the risk of avoidable loss to the public exchequer in future, and at the same time, to raise the bar of due diligence and regulatory scrutiny/oversight at the appropriate fora.

Recently, this agency is informed that banks are showing hesitation in doing business with OMCs, apparently due to the above referred investigation undergoing in this agency.

In this connection, it is to reassure that this agency fully supports any and all efforts of the banking industry to enter into any restructuring of its exposure to HPL as it deem fit as per law ,” said the FIA letter..

“This agency also unequivocally assures all concerned that this investigation has been and shall continue to be conducted with the highest professional standards and should not be a source of concern to those not guilty of misconduct/breach of trust,” reads FIA letter.

According to sources, the current total working capital facilities available with Parco is Rs 144,550 million, NRL Rs 105,850 million, PRL Rs 51550 million, CPL (Cnergyico Pk Limited)  Rs 46550 million, and ARL Rs 3000 million.

It is relevant to note that Oil Companies Advisory Council (OCAC) had earlier written a letter to the Governor of State Bank of Pakistan (SBP) and sought intervention after banks refusal to extend the credit limits to OMCs/refineries. OCAC also warned the Governor SBP that hesitation of banks to extend financing facilities to OMCs, refineries may lead to an oil crisis in the country.

It is pertinent to mention that President Arif Alvi has so far granted sanction for placement of Rs20 billion in the assignment account for reimbursement of Price Differential Claims (PDC) of Oil Marketing Companies (OMCs) and refineries.

In a letter dated March 18, 2022 to the Accountant General of Pakistan, Petroleum division conveyed the sanction of the President to the placement of Rs20 billion in the assignment account titled Reimbursement of Price Differential Claims (PDC) of Oil Marketing Companies (OMCs) and refineries

“It is requested that the Manager National Bank of Pakistan, Main Branch, Karachi may be advised to arrange payment against the ceiling of Rs2 billion on the receipt of cheques and prescribed schedule of payment duly signed by the authorized signatories of the account,” said a letter of the petroleum division.

Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected]

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