LAHORE: The Oil Marketing Association of Pakistan (OMAP) has called upon the Oil and Gas Regulatory Authority (Ogra) to take urgent regulatory measures to address mounting financial challenges facing the country’s downstream petroleum sector, warning that continued inaction could threaten investment, fuel supply stability, and the survival of emerging oil marketing companies (OMCs).
In this regard Chairperson of OMAP Tariq Wazir Ali wrote a letter to the Ogra chairperson, in which he expressed serious concerns over the recent petroleum pricing revisions introduced through a new pricing mechanism. According to Ali, the abrupt reduction in petroleum product prices without prior consultation with industry stakeholders has resulted in significant inventory losses for OMCs and refineries.
The OMAP chairperson further said that companies have procured petrol and high-speed diesel at prevailing international market rates and are maintaining mandatory inventories as required under regulatory obligations. However, the sudden downward adjustment in ex-depot prices has led to substantial financial losses, placing severe pressure on the working capital and liquidity of OMCs.
Ali further highlighted in the letter what it described as a regulatory contradiction, noting that OMCs are legally required to maintain strategic fuel stocks to ensure uninterrupted national supply, yet they remain exposed to heavy losses whenever prices are revised downward without adequate safeguards.
The OMAP chairperson further pointed out that OMC distribution margins have remained unchanged since 2023 despite persistent inflation and rising operational expenses, including transportation, manpower, fuel and compliance costs. Tariq also warned that shrinking margins are making it increasingly difficult for companies, particularly smaller and emerging OMCs, to sustain operations and continue investing in infrastructure.
Adding to the sector’s concerns, OMAP noted that outstanding price differential claims (PDCs) amounting to approximately Rs67 billion remain unpaid. These claims, according to the association, represent legitimate receivables owed to OMCs that supplied petroleum products at government-determined prices, often absorbing the financial burden through their own resources.
Ali said the downstream petroleum sector has continued to ensure uninterrupted fuel supplies across the country despite international market volatility, currency fluctuations, and increasing financial pressures. He emphasised that while the industry has consistently fulfilled its national responsibilities, the growing burden of policy-induced costs has become unsustainable.
The association warned that the current environment of abrupt pricing interventions, stagnant margins, and unresolved payment obligations is undermining investor confidence at a time when Pakistan is actively seeking both local and foreign investment. OMAP cautioned that financially weaker companies could face serious operational difficulties or insolvency if corrective measures are not introduced.
OMAP has urged Ogra to immediately revise OMC distribution margins in line with inflation and increased operating costs, establish a formal consultative mechanism for petroleum pricing decisions, facilitate the prompt settlement of outstanding PDCs, and develop a regulatory framework to protect OMCs and refineries from inventory losses arising from administrative price reductions.
The association has also requested an urgent meeting with the Ogra chairperson to discuss the challenges facing the industry and explore measures aimed at ensuring the long-term stability and sustainability of Pakistan’s downstream petroleum sector.
“Timely regulatory intervention is essential to restore confidence, safeguard energy security, and maintain a commercially viable environment for all stakeholders in the petroleum supply chain,” OMAP stated.
