ISLAMABAD: The Oil Companies Advisory Council (OCAC) has raised serious concerns over recent changes in the high-speed diesel (HSD) pricing formula and continued delays in the payment of price differential claims (PDCs).
In a detailed letter addressed to Minister for Energy (Petroleum Division) Ali Pervaiz Malik on Monday, the industry body said two concurrent developments, a revision in pricing methodology and delays in regulatory reimbursements, are placing “considerable financial strain” on oil marketing companies (OMCs), which are responsible for nationwide fuel procurement and distribution.
The council warned that mounting financial pressure could undermine liquidity in the downstream petroleum sector and threaten the stability of fuel supply operations across Pakistan.At the centre of the dispute is a recent revision in the HSD pricing mechanism, under which the government has shifted the benchmark from the average FOB Platts (Arab Gulf) quotation to the lowest FOB Platts quotation within the pricing window.
While the move is understood to be aimed at improving pricing efficiency and protecting consumers from international price volatility, the OCAC has warned that the new method does not reflect the realities of petroleum import economics.
According to the council, oil imports are typically executed through tender-based procurement systems that depend on cargo availability, shipping schedules, and transaction timing -- factors that make actual purchase prices more closely aligned with average market levels rather than the lowest recorded quotation on any given day.
The industry body argued that this structural divergence between benchmark pricing and real procurement costs becomes especially damaging during periods of volatility in global oil markets. It said companies are now facing “significant inventory losses” as cargoes purchased at higher international prices are being sold at newly determined lower regulated prices.
The OCAC cautioned that such losses, coupled with already limited marketing margins in a regulated environment, are eroding the sector’s ability to absorb financial shocks. It warned that this could impact operational planning, working capital cycles and even the ability of companies to maintain steady import flows.
“The framework appears increasingly unable to absorb market shocks, pointing to growing systemic stress within the sector,” the council said, urging authorities to review the revised methodology.
It has recommended reverting to the previous average-based FOB Platts benchmark and introducing a transparent, uniform import premium applicable across all market participants to better reflect procurement realities.
In a parallel concern, the OCAC highlighted persistent delays in the disbursement of PDCs, payments issued to compensate oil marketing companies for government-mandated price adjustments.
The issue stems from a mechanism introduced by the Oil and Gas Regulatory Authority (Ogra) on March 17, 2026, which stipulates that PDC payments should be made within two days of claim submission.
The OCAC said that payments have not been fully released within the stipulated timeframe, with even the initial tranche remaining partially unsettled in some cases. This, it noted, is creating significant liquidity pressures for industry participants.
Providing a breakdown of pending claims across recent pricing periods, the council said outstanding amounts include approximately Rs23 billion for March 14-20 (HSD and PMG combined impact), Rs48 billion for March 21-27, and Rs57 billion for March 28-April 2.
This takes the total outstanding PDCs to roughly Rs128 billion, which the OCAC described as a substantial working capital exposure for the downstream petroleum sector. While 90 per cent of the first tranche for March 14-20 has been released, the OCAC noted that 10 per cent has been withheld. It further pointed out that evolving documentation requirements and proposals to retain additional amounts pending reconciliation with the Federal Board of Revenue (FBR), a process that could take up to two months, are further delaying final settlement.
The OCAC warned that prolonged delays in PDC disbursements are disrupting the working capital cycle of oil marketing companies, which must continuously finance imports, manage inventory, and ensure uninterrupted fuel distribution nationwide. It stressed that because marketing margins are regulated and limited, companies have little capacity to absorb either inventory losses or payment delays of this magnitude.
“The ability of OMCs to continue importing, financing and efficiently distributing fuel is now critically dependent on the urgent restoration of liquidity and the establishment of a predictable and stable regulatory framework,” the council stated.
The industry body cautioned that the issue is no longer confined to corporate profitability, but could escalate into a broader risk for national fuel supply stability if not addressed promptly.In its concluding remarks, the OCAC urged the Ministry of Energy to take immediate steps to stabilize the downstream petroleum framework. It called for: i) a comprehensive review of the revised HSD pricing methodology; ii) immediate release of all pending PDC payments in line with Ogra’s prescribed timelines and iii) avoidance of additional withholding or procedural delays, including extensive documentation requirements; iv) restoration of predictability and transparency in pricing and reimbursement mechanismsThe council also requested an urgent meeting with the ministry to jointly develop a “workable and sustainable way forward” for the sector.
