ISLAMABAD: The country’s oil industry has urged the Oil and Gas Regulatory Authority (OGRA) to reconsider its proposal to withhold 10 percent of price differential claims (PDCs), warning that the move could undermine the financial sustainability of oil marketing companies (OMCs) and disrupt fuel supply operations nationwide.
In a letter addressed to Acting Chairman OGRA, Shahzad Iqbal, Secretary General of the Oil Companies Advisory Council (OCAC), Dr Syed Nazir A. Zaidi, stated that during a recent IFEM meeting, the industry was informed of OGRA’s plan to withhold 10 percent of admissible claims at the time of initial disbursement.
Under the proposed mechanism, the withheld amount would be released within a maximum period of two months after cross-verification of sales tax returns and petroleum levy computerized payment receipts (CPRs) submitted by OMCs to the Federal Board of Revenue (FBR). The industry understands that the revised mechanism has also been endorsed by the Ministry of Energy (Petroleum Division) to address potential discrepancies in petroleum levy and sales tax returns.
OCAC noted that OGRA issued the PDC disbursement procedure on March 17, 2026, followed by additional operational guidelines on March 25, including submission protocols for audited claims and undertakings. Subsequently, through a letter dated March 30, 2026, OGRA introduced a requirement for audit by PwC.
The Council argued that the mechanism was initially communicated with the understanding that PDC claims would be processed and reimbursed efficiently. However, the proposed withholding of 10 percent introduces an additional financial constraint beyond the existing framework.
Against a cumulative claim size of Rs 27 billion, a 10 percent withholding translates into approximately Rs 2.7 billion, placing a significant financial burden on the industry. With a subsequent tranche of around Rs 47 billion expected, the cumulative impact could rise to approximately Rs 7.4 billion, further intensifying liquidity pressures on OMCs.
The industry highlighted several concerns. Petroleum levy payments are already being deposited by refineries, while OMCs ensure compliance on imports. Companies are also submitting audited claims signed by their CEOs and CFOs, incurring substantial audit costs. The requirement for an additional audit by PwC has raised feasibility concerns, given limited capacity to conduct industry-wide audits within tight timelines, while also adding to financial costs. Moreover, the oil marketing sector is currently operating under tight liquidity conditions, with constrained banking limits and disrupted cash flows, exacerbated by elevated international fuel prices amid prevailing geopolitical tensions.
OCAC maintained that in a regulated environment—where margins have remained unchanged since September 2023—such measures could severely strain the financial viability of OMCs. It warned that some companies may face acute financial stress, potentially affecting operational continuity.
The Council further cautioned that any supply disruptions arising from these systemic challenges should not be attributed solely to the industry.
It also noted that the PDC reimbursement mechanism introduced in 2022 functioned efficiently, ensuring timely settlement of receivables with the continued support of OGRA and the Accountant General Pakistan Revenues (AGPR).
In view of these concerns, OCAC has urged the acting chairman of OGRA to reconsider the proposed withholding of 10 percent of claims and take measures to safeguard the financial sustainability of OMCs while ensuring uninterrupted fuel supply across the country. In a separate letter, OCAC raised concerns over OGRA’s directive regarding the provision of monthly audited data of stocks and inventory.
Referring to OGRA’s letter dated March 30, 2026, issued in line with directives of the Prime Minister, OCAC noted that all stocks and inventories held by OMCs and refineries—at any location—are to be audited by PricewaterhouseCoopers (PwC), with a consolidated report to be submitted on a monthly basis. OCAC stated that it has convened a meeting with member companies to deliberate on the implementation of the directive. During initial discussions, several concerns were highlighted and shared with OGRA and the Ministry.
The industry pointed out that the directive was issued at very short notice, while some companies had already engaged reputable audit firms, including KPMG and others, for stock verification. It requested that a detailed Terms of Reference (ToR) or implementation framework be shared to ensure clarity on scope, methodology, and reporting requirements OCAC also noted that restricting audits to a single firm—PwC—could create operational and manpower challenges, given the geographical spread of storage facilities, refineries, and depots across the country, and the requirement for monthly audits. The Council suggested that the top 10 reputable audit firms, as per ICAP’s Quality Control Review (QCR) A-category, be allowed to undertake the audits to ensure transparency, maintain audit integrity, and facilitate timely completion.
The industry reaffirmed its commitment to supporting government initiatives aimed at enhancing transparency and accurate reporting of petroleum stocks, adding that it stands ready to cooperate once the framework and modalities are clearly defined.
OCAC expressed hope that OGRA will share the ToRs and necessary guidance at the earliest to enable smooth compliance. It also proposed that ongoing audits be completed by currently engaged auditors, while the new framework—allowing top-tier audit firms—be implemented from the next audit cycle.
