Pakistan’s oil marketing companies are grappling with a severe liquidity crisis, with approximately Rs107 billion in unpaid price differential claims causing financial strain. The industry faces challenges as the Oil and Gas Regulatory Authority allegedly keeps changing documentation requirements instead of settling dues promptly. The first claim of around Rs27 billion, filed in mid-March, was only partially resolved, leaving subsequent claims worth Rs70-80 billion entirely unpaid.
Officials highlight that the issue lies in the unpredictability rather than transparency. The regulatory authority, Ogra, introduces new documentation demands each time companies attempt to comply, such as invoice-level reconciliations and multiple certifications. This continuous cycle resets the process, with a recent revised format circulated without clarity on potential further changes. Industry sources express frustration, stating that the shifting requirements hinder progress and may lead to audit firms refusing involvement due to scope misalignment.
The situation could escalate if the regulatory authority moves forward with a proposal to withhold 10% of payments until tax reconciliation with the Federal Board of Revenue, potentially locking up an additional Rs7.4 billion for up to two months. Price differential claims arise when the government caps fuel prices below procurement costs, necessitating reimbursement. Delays in payments force oil marketing companies to borrow funds, further exacerbating their financial burdens.
Industry officials caution that the ongoing liquidity crisis could escalate into fuel supply disruptions if left unaddressed. They urge the Ministry of Energy to intervene by facilitating the immediate settlement of dues, establishing a unified documentation framework, and reconsidering the proposal to withhold payments. The sector emphasizes the critical need for stability and resolution to avert potential disruptions in fuel supply.
