ISLAMABAD:A proposed 10 percent withholding on Price Differential Claims (PDC) may squeeze oil marketing companies by billions, with the industry warning it could disrupt fuel supplies if implemented.
As per details, the Oil marketing companies (OMCs) have voiced serious concerns over a proposed mechanism by the Oil and Gas Regulatory Authority (OGRA) to withhold 10% of Price Differential Claims (PDC), cautioning that the move could trigger a significant liquidity crunch and threaten fuel supply stability.
In a letter to OGRA’s Vice Chairman, the Oil Companies Advisory Council (OCAC) stated that the regulator is considering deducting 10% of admissible PDC claims at the time of initial disbursement. The withheld amount would be released after reconciliation of sales tax returns and computerized payment receipts (CPRs) with the Federal Board of Revenue (FBR), within a maximum period of two months.
While acknowledging that the proposed mechanism has been endorsed by the Petroleum Division to address discrepancies in petroleum levy and sales tax reporting, OCAC warned that the plan would impose an additional financial burden on the industry.
According to the council, total outstanding PDC claims currently stand at around Rs27 billion, meaning an immediate withholding of about Rs2.7 billion under the proposed arrangement. With another tranche of approximately Rs47 billion expected, the cumulative financial impact could reach Rs7.4 billion, putting further strain on OMCs’ cash flows.
The industry body highlighted that OMCs are already operating under tight liquidity conditions due to stagnant margins since September 2023, limited borrowing capacity, and high international fuel prices. It cautioned that any further delay in payments could intensify financial stress across the sector.
OCAC also pointed out that refineries are already depositing petroleum levy amounts, while OMCs remain compliant with import-related obligations. The companies are submitting audited PDC claims, duly certified by their chief executives and chief financial officers, which already entails significant compliance costs.
Expressing concern over additional audit requirements, the council noted that conducting further verifications through external auditors would be both time-consuming and financially burdensome for the industry.
The letter warned that in a regulated environment with fixed margins, such measures could push some companies toward financial distress, potentially affecting their ability to maintain smooth operations. It stressed that any disruption in fuel supply, if it occurs, would stem from structural financial constraints rather than operational inefficiencies.
OCAC urged OGRA to reconsider the proposal and ensure timely disbursement of PDC claims, emphasizing that uninterrupted cash flow is essential to sustain the country’s fuel supply chain.
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