ISLAMABAD: Pakistan’s oil industry has sounded the alarm over a growing list of unresolved challenges that, it warns, could push the sector towards collapse. In a letter to the Oil and Gas Regulatory Authority (Ogra), the Oil Companies Advisory Council (OCAC) urged immediate intervention to address critical issues ranging from delayed sales tax recovery to port bottlenecks and costly digitisation requirements.
OCAC Secretary General Dr. Syed Nazir A. Zaidi highlighted the sector’s concerns in a detailed letter to the Ogra chairman, also shared with the petroleum minister. These issues were earlier discussed in a meeting attended by officials from the Ministry of Energy, Ogra, and oil marketing companies (OMCs), where the minister had directed the regulator to engage the industry and deliver time-bound solutions.
A key sticking point is the reimbursement of Rs73 billion in outstanding GST claims for April 2022 to June 2024, which the industry says has eroded liquidity and undermined financial stability. While GST adjustments for FY25 are routed through the inland freight equalisation margin (IFEM), OMCs demand a formal mechanism to settle all pending claims, including future recoveries and financing costs at Kibor + 2%.
Exchange rate losses remain another major burden. The industry argues that the current recovery framework is inadequate, lacking a transparent and uniform formula that fairly compensates importers during periods of currency volatility. OCAC has pressed Ogra to swiftly finalise a standardised exchange loss mechanism with clear, timely adjustments.
Concerns have also been raised over Phase-3 digitisation of retail outlets, citing compressed timelines and the absence of a cost-recovery framework despite significant expenditures. The council has requested revised timelines and a transparent reimbursement mechanism.
Further compounding the crisis are severe port infrastructure constraints—especially at Fotco, where limited channel depth, restricted night navigation, and the lack of a dedicated motor gasoline pipeline have led to heavy demurrage costs. OCAC has urged Ogra to coordinate with port authorities and incorporate verified costs into IFEM.
In line with ministerial directives, the industry has called on Ogra to convene an urgent meeting to finalise timelines, methodologies and approval processes for resolving these critical matters.
Story by Zafar Bhutta
