Oil marketing companies seek urgent settlement of Rs66.7bn PDCs, implementation of margin hike

ISLAMABAD: The Oil Companies Advisory Council (OCAC) has urged the Oil and Gas Regulatory Authority (OGRA) to immediately settle outstanding Price Differential Claims (PDCs) worth around Rs66.7 billion and notify a long-pending increase in oil marketing companies’ (OMCs) margins, warning that mounting liquidity pressures could undermine the country’s fuel supply chain.

In a letter to OGRA Chairman, the OCAC said the unresolved claims and delayed revision of OMC margins had placed the industry’s financial sustainability and its ability to maintain an uninterrupted supply of petroleum products under “serious strain”.

The industry body said approximately Rs66.7bn in PDCs, broadly equivalent to the value of five Mogas cargoes, remained outstanding with OGRA, with a significant portion of the claims pending since March 2026.

The OCAC said it had previously sought settlement of the claims by June 8, 2026, but the matter remained unresolved despite verification and audit processes undertaken after the reimbursement mechanism had been finalised.

It urged OGRA to urgently conclude verification and release all verified and approved claims, including approved premium differential claims relating to motor spirit (MS) imports during the recent geopolitical crisis.

The letter referred to an earlier OCAC communication dated September 15 concerning the premium differential claims and stressed that the continued delay was adding to liquidity pressures faced by OMCs.

The industry body also pressed the regulator to implement a Rs1.22 per litre increase in OMC margins, which, according to the OCAC, had already been approved but was yet to be notified and implemented.

OMC margins were last revised in September 2023 and had remained unchanged despite what the advisory council described as significant increases in operating, financing, technology, regulatory and compliance costs.

The OCAC pointed out that dealer margins had been increased by Rs1.34 per litre in August 2026, while the approved increase in OMC margins had yet to take effect.

Unlike dealers, it said, OMCs were responsible for the entire chain associated with product procurement and supply, including import financing, inventory management, logistics and ensuring the availability of petroleum products throughout the country.

The companies were also facing expanding regulatory and digitisation requirements, while implementation timelines were becoming increasingly compressed, according to the letter.

The OCAC therefore asked OGRA to immediately notify and implement the Rs1.22 per litre OMC margin increase and establish a predictable mechanism for periodic revision of the margins.

The advisory council said the issue had become more pressing because of the deteriorating liquidity position of the oil marketing sector.

“It is important to place on record that OMCs have consistently supported the government, particularly when fuel security and uninterrupted supplies have been at stake,” the letter said, adding that the same industry was now facing an acute and worsening liquidity crisis.

According to the OCAC, OMCs were effectively being required to finance the supply chain while their own liquidity was being progressively drained because of unresolved industry issues.

The situation, it added, had been further aggravated by the evolving geopolitical environment and potential disruptions to regional supply routes, including the East-West Pipeline.

The industry body warned that Pakistan could face significant supply-side challenges if the liquidity position of OMCs continued to deteriorate.

It argued that any resulting disruption in the petroleum supply chain should not be attributed to the oil industry if companies’ liquidity constraints were caused by delays in resolving outstanding claims and margin-related issues.

The OCAC also recalled that senior leadership of its member companies had previously met the OGRA chairman and raised the same concerns. While assurances had reportedly been given regarding their early resolution, the advisory council said no commensurate resolution had been achieved so far.

The letter sought an urgent meeting between OGRA and senior leadership of OCAC member companies to discuss the outstanding PDCs, OMC margin revision and the broader liquidity situation.

The council formally invited the OGRA chairman to its Karachi office for a meeting, preferably early the following week, to address the issues.

The letter was signed by Syed Nazir Abbas Zaidi, Secretary General, OCAC, and copied to Federal Minister for Energy (Petroleum Division) Ali Pervaiz Malik, Federal Secretary Petroleum Division M. Hamid Yaqoob Sheikh and the Director General Oil, Ministry of Energy (Petroleum Division).

The development comes at a time when Pakistan’s petroleum sector is facing heightened pressure from international market volatility and geopolitical disruptions. For OMCs, delays in reimbursement claims can tie up substantial working capital, while fixed margins can add to pressure when financing, logistics and compliance costs rise.

The OCAC’s latest intervention has therefore placed the regulator under pressure to address both the immediate claims backlog and the longer-term mechanism for determining OMC margins.

The advisory council has linked the two issues directly to the industry’s liquidity position and its ability to maintain fuel supplies, making timely settlement of verified claims and implementation of the approved margin adjustment central to its latest demand.