ISLAMABAD: The Oil Companies Advisory Council (OCAC) has submitted proposals to resolve the issue of industry, including reimbursement of GST claims, exchange loss recovery, digitization and port infrastructure constrains and demurrage.
In a letter to Chairman Oil and Gas Regulatory Authority (OGRA), OCAC Secretary General, Dr. Syed Nazir. A. Zaidi has cited reference to the meeting held on December 3, 2025 under the chairmanship of the Federal Minister of Energy, Petroleum Division wherein various industry challenges were deliberated upon in the presence of representatives from MEPD, OGRA and OMCs.
According to the letter, during the meeting, the Minister directed OGRA to engage with the industry and resolve the issues raised in an amicable and time-bound manner. In continuation of those discussions, OCAC has formally submitted the following issues for OGRA’s urgent review and resolution:
Reimbursement of GST Claims (April 2022-June 2024 and July 2025 onwards) Industry-wide GST claims amounting to Rs. 73 billion remain outstanding with FBR for the period April 2022 to June 2024. As highlighted in the meeting, these long-pending claims have severely impacted industry liquidity and financial sustainability. While GST claims for FY 2024-25 are being settled through IFEM, industry members require a formal mechanism for the recovery of: (i) outstanding GST claims for April 2022-June 2024; and (ii) GST claims accruing from July 2025 onwards.
The Minister advised OGRA to work with OCAC and finalize recommendations for onward submission to the Minister’s Office for taking up the matter with the Prime Minister. In this regard, OCAC has proposed the development of an appropriate mechanism for reimbursement, including recovery of costs attributable to the sales tax exemption (July 2025 onwards) and financing costs on unadjusted sales tax (April 2022 to June 2024) at KIBOR +2% for both OMCS and refineries.
Exchange Loss Recovery Framework: The existing exchange loss recovery mechanism fails to adequately compensate the actual losses suffered by OMCs on account of exchange rate volatility. Industry representatives have consistently pointed out the lack of a uniform, transparent, and equitable methodology that provides a level playing field for all importers. The Minister emphasized that OGRA must verify the genuineness of financial claims and resolve them expeditiously. Accordingly, the industry has urged OGRA to promptly finalize a standardized exchange loss formula, incorporating a well-defined and timely adjustment cycle within the pricing mechanism. The current pricing formula is not viable and creates market distortions, particularly when no imports or settlements occur during a pricing period, leaving certain industry members uncompensated.
Digitization – Phase 3 Timelines and Cost Recovery Mechanism: The industry has reaffirmed its full cooperation with OGRA on digitization efforts, however, Phase 3 (Sitewise Digitization) presents operational and financial challenges, due to highly compressed implementation timelines, and absence of a cost recovery mechanism despite the substantial expenditure required. OGRA has been requested to reassess the implementation timelines and establish a transparent cost recovery mechanism.
Port Infrastructure Constraints and Demurrage: Demurrage charges incurred by the oil industry due to port infrastructure constraints at FOTCO (including channel depth limitations, restricted night navigation, and the non-availability of a dedicated MS pipeline) require immediate attention. The industry has sought OGRA’s support in coordinating with port authorities to achieve structural and operational improvements and incorporating verifiable demurrage costs into the industry’s cost recovery framework through IFEM. In line with the Minister’s directives, OCAC has requested OGRA to convene a meeting at the earliest with OCAC and industry stakeholders to finalize timelines, methodologies and approval processes for the above matters. Ends
