Abbas Basir, the head of the Office of the Second Vice-President, announced on Thursday that orders had been issued to seal the Hairatan Port refinery owned by Ghazanfar Group while the a team investigates accusations against the company for unfair trade practices.
Earlier this week, President Hamid Karzai charged his Second-Vice President, Mohammad Karim Khalili, with investigating and resolving the controversy that erupted the week before when the Association of Oil Importers (AOI), along with a group of 21 other oil importing companies, accused Ghazanfar Group of unfair trade practices. The accusers claimed Ghazanfar of adulterating imported semi-crude oil by treating it with stabilizers, all under the pretext of refinement, which then allowed the company to charge prices that undercut the market.
The Afghan Chamber of Commerce & Industries (ACCI) said that the semi-refined crude oil known as "Premagon" is imported from Turkmenistan and was banned for years in Afghanistan until Ghazanfar built its refinery in Hairatan Industrial Park in northern Balkh province. The primary basis of the accusation against Ghazanfar is the belief that the Hairatan refinery is incapable of properly processing the semi-refined crude oil the company imports. ACCI officials have claimed that Russia is the only country that has the facility to process semi-refined crude oil, suggesting that Ghazanfar is unable to refine the thousands of tons of oil it is importing in the manner it claims to be.
Nevertheless, Ghazanfar officials categorically denied the validity of the accusations brought against them, and said they would cooperate with the government if it wished to send inspectors to their facility.
Mr. Basir said on Thursday that an investigative delegation had been formed and would be heading for the refinery in Hairatan on Saturday. Until their investigation is complete, the Second-Vice President's office mandated that the facility's operations be halted.
"A special team comprised of representatives from security institutions, the High Office of Oversight and Anti-Corruption, the Ministry of Finance and several other offices have been assigned the task to seal the refinery of Ghazanfar Group until the investigative team completes its investigation," Mr. Basir said.
Meanwhile, Al-Hajj Mohammad Ibrahim Ghazanfar, Chairman of the Ghazanfar Group, strongly criticized the selection process used to form the team that would investigate his facility. Mr. Ghazanfar urged the authorities to form a team made up of more neutral individuals.
"It is a good move that government has set-up a commission, however, the formation of the commission was not done in the right manner – there is a businessman who himself is a claimant," said Mr. Ghazanfar. "We demand the government assign professional and technical people to carry out the investigations."
According to petroleum experts, the type of adulterated oil Ghazanfar is accused of producing is highly toxic for the environment.
In response to the allegations launched against them, Ghazanfar officials said that the oil refinery in question was set-up in accordance with international standards. The Group added that so far, the refinery has refined 1,124 tons of semi-refined crude oil and has sold it in the local market.
Two months back the Council of Ministers (CoM) granted a license to Ghazanfar for importing semi-refined crude oil. ACCI officials said that Ghazanfar is permitted to import over 500,000 tons of semi-refined crude oil as per the Council of Ministers' decision and a license issued by the Ministry of Commerce and Industries (MoCI).
ACCI officials have previously claimed that the lack of effective monitoring system by the government on the import of crude oil and hasty government decisions are some of the reasons that enabled the present controversy to arise.