Energy / Mounting Dues Leave Pakistan’s Oil Companies in Survival Mode
·1 hour ago·2 min read
Key Points
Pakistan’s oil marketing companies face a liquidity crunch with Rs107 billion in unpaid claims, raising fears of fuel supply disruptions if government delays persist.
New Delhi, Apr 9: Pakistan’s oil marketing companies (OMCs) are grappling with a severe liquidity crisis as the government delays clearing price differential claims (PDCs) worth nearly Rs107 billion. Industry insiders warn that the prolonged stalemate could soon disrupt fuel supplies across the country.
According to reports, the first claim of Rs27 billion filed in mid-March was only partially settled, while subsequent claims amounting to Rs70–80 billion remain unpaid. The mounting exposure has left OMCs operating on razor-thin margins, struggling to maintain cash flow and relying heavily on borrowing to bridge the gap.
The Oil and Gas Regulatory Authority (Ogra) has been accused of repeatedly shifting documentation requirements, creating uncertainty for the industry. Officials say the issue is not transparency but unpredictability. Each time companies comply, new demands emerge—ranging from invoice-level reconciliations to repeated CEO, CFO, and auditor certifications. A revised format was circulated as recently as Monday night, leaving industry players frustrated and audit firms hesitant to participate, as the requirements fall outside standard audit practices.
Also Read: Pakistan’s Economic Woes Deepens as Deadline for Repaying $3.5 Billion UAE Debt Nears
The crisis could deepen if Ogra proceeds with its proposal to withhold 10 per cent of payments until tax reconciliation with the Federal Board of Revenue (FBR). This move could lock up another Rs7.4 billion for up to two months, further straining liquidity.
Price differential claims arise when the government caps fuel prices below procurement costs, with the difference reimbursed to OMCs. Delays in settlement force companies to borrow at high interest rates, adding to financial stress.
Industry officials caution that if liquidity continues to erode, fuel supply disruptions may become inevitable. The sector has urged the Ministry of Energy to intervene, calling for immediate settlement of dues, a unified documentation framework, and withdrawal of the proposed withholding measure.
With Pakistan already facing economic challenges, the oil sector’s crisis underscores the urgent need for regulatory clarity and timely government support to ensure uninterrupted fuel availability and stability in the energy market.
According to reports, the first claim of Rs27 billion filed in mid-March was only partially settled, while subsequent claims amounting to Rs70–80 billion remain unpaid. The mounting exposure has left OMCs operating on razor-thin margins, struggling to maintain cash flow and relying heavily on borrowing to bridge the gap.
The Oil and Gas Regulatory Authority (Ogra) has been accused of repeatedly shifting documentation requirements, creating uncertainty for the industry. Officials say the issue is not transparency but unpredictability. Each time companies comply, new demands emerge—ranging from invoice-level reconciliations to repeated CEO, CFO, and auditor certifications. A revised format was circulated as recently as Monday night, leaving industry players frustrated and audit firms hesitant to participate, as the requirements fall outside standard audit practices.
Also Read: Pakistan’s Economic Woes Deepens as Deadline for Repaying $3.5 Billion UAE Debt Nears
The crisis could deepen if Ogra proceeds with its proposal to withhold 10 per cent of payments until tax reconciliation with the Federal Board of Revenue (FBR). This move could lock up another Rs7.4 billion for up to two months, further straining liquidity.
Price differential claims arise when the government caps fuel prices below procurement costs, with the difference reimbursed to OMCs. Delays in settlement force companies to borrow at high interest rates, adding to financial stress.
Industry officials caution that if liquidity continues to erode, fuel supply disruptions may become inevitable. The sector has urged the Ministry of Energy to intervene, calling for immediate settlement of dues, a unified documentation framework, and withdrawal of the proposed withholding measure.
With Pakistan already facing economic challenges, the oil sector’s crisis underscores the urgent need for regulatory clarity and timely government support to ensure uninterrupted fuel availability and stability in the energy market.
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