ISLAMABAD: The Oil Companies Advisory Council (OCAC) has warned that recent changes in High-Speed Diesel (HSD) pricing and delays in Rs128 billion worth of Price Differential Claims (PDC) payments are straining oil marketing companies and threatening fuel supply stability across the country.
In a letter dated April 13, 2026, addressed to Federal Minister for Energy (Petroleum Division) Ali Pervaiz Malik, OCAC highlighted two critical issues impacting the downstream petroleum sector: revision in the HSD pricing formula and delays in PDC disbursements.
The council expressed concern over the recent shift in HSD pricing methodology, where the benchmark has been revised from the average FOB Platts (Arab Gulf) quotation to the lowest quotation within the pricing window. While acknowledging the government’s intent to protect consumers and improve efficiency, OCAC argued that the new formula does not reflect actual import procurement costs.
“OCAC members have noted that the pricing formula for High Speed Diesel (HSD) has recently been revised to incorporate the lowest FOB Platts (Arab Gulf) quotation within the pricing window, replacing the earlier methodology based on the average FOB Platts quotation,” said the letter.
According to OCAC, petroleum imports are influenced by factors such as tender timelines, shipping schedules, cargo availability, and prevailing global market conditions. As a result, companies are unable to procure fuel at the lowest quoted prices used in the new benchmark, creating a mismatch between regulated prices and actual costs.
This gap has already resulted in significant inventory losses, as companies are now forced to sell petroleum products at lower regulated prices despite having procured them at higher international rates. In a tightly regulated environment with limited marketing margins, OCAC warned that such losses are unsustainable and are putting pressure on working capital, operational planning, and future import capabilities.
The council described the situation as a “structural deficiency” in the pricing framework, which limits the sector’s ability to absorb international price volatility and exposes it to systemic financial stress.
OCAC has urged the government to review the revised pricing mechanism and consider reverting to the previous formula based on average FOB Platts benchmarks, along with a transparent and uniform import premium to better align prices with actual procurement realities.
On the second issue, OCAC raised serious concerns over delays in the disbursement of PDCs, despite a mechanism issued by OGRA on March 17, 2026, requiring payments within two days of claim submission.
The council noted that payments have not been fully released to all companies, with even the first tranche only partially settled. This has created acute liquidity constraints for oil marketing companies responsible for maintaining nationwide fuel supply.
OCAC shared that PDC claims for the period March 14 to April 2 amount to approximately Rs128 billion, with Rs23 billion claimed for March 14–20, Rs48 billion for March 21–27, and Rs57 billion for March 28–April 2.
It further pointed out that only around 90percent of initial claims were released to some companies, while 10pc remains withheld. Additional proposals to retain another 10pc pending reconciliation with the Federal Board of Revenue (FBR) could delay payments by up to two months, worsening the liquidity crunch.
The council also criticized evolving documentation requirements, including demands for top management and auditors’ signatures on large volumes of invoices, stating that such measures are further delaying disbursements.
OCAC warned that prolonged delays in PDC payments are disrupting the working capital cycle required for fuel imports, procurement, and distribution, thereby posing a serious risk to the continuity of petroleum supply in the country.
In its key demands, OCAC called for an immediate review of the HSD pricing formula to ensure alignment with actual market dynamics, and the expedited release of all outstanding PDC payments without additional administrative hurdles.
The council cautioned that the sector has reached the limits of its financial capacity, emphasizing that the issue now goes beyond profitability and directly threatens the reliability of Pakistan’s fuel supply chain.
OCAC also requested an urgent meeting with the Ministry of Energy to discuss the challenges and jointly develop a sustainable and predictable regulatory framework to ensure uninterrupted fuel supply across the country.
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