ISLAMABAD: Pakistan’s oil industry has demanded immediate intervention from the government, warning that the downstream petroleum sector is facing severe financial pressure due to non-payment of billions of rupees in dues, rising costs and policy uncertainty.
The Oil Companies Advisory Council (OCAC), in a letter to the Prime Minister, has requested an urgent meeting to discuss the key issues facing the oil industry. Chairman of the council, Asif Iqbal, said that the leadership of the country’s major oil marketing companies and refineries is keen to meet the Prime Minister to hold detailed discussions on the future of the industry and the stability of the energy sector.
According to the OCAC, about Rs 54 billion has been released by the government in the form of price differential claims, however, about Rs 66 billion of claims are still pending. The industry maintains that the continuous delay in payment of these dues has severely affected the cash position of the companies.
The letter states that all the claims are verified by internal and external audits, yet the oil marketing companies are facing financial difficulties due to non-payment in full. The council demanded that OGRA be directed to release all pending claims by June 8 so that the industry gets immediate relief.
The oil industry has also expressed reservations over the proposed tax on inventory profits in the upcoming federal budget. OCAC says that if tax is levied on inventory profits made during price increases in the global market, then inventory losses incurred during price declines should also be recognized under the same principle.
The council pointed out that under the current policy, oil marketing companies are required to maintain a mandatory stock of 20 days, due to which price fluctuations have a full impact on the companies. Therefore, it will be necessary to ensure balance and transparency in any new tax system.
The OCAC also said that the margins of oil marketing companies have not increased for almost three years, while inflation and operational costs are continuously increasing. The industry maintains that the delayed revision of margins has affected investment and infrastructure development.
In addition, concerns were also expressed over the mandatory installation of Level 3 fast electric vehicle chargers at petrol pumps. According to the industry, the use of electric vehicles is limited in the current situation, while the installation of chargers is costly, so this policy needs to be implemented in a phased manner.
According to experts, close cooperation between the government and the industry is necessary for sustainable development in the energy sector so that the country’s fuel supply chain and energy system can be kept stable.
