Pakistan’s downstream petroleum sector received a major boost after the Oil and Gas Regulatory Authority (OGRA) assured oil marketing companies (OMCs) that it would introduce a revised framework and timeline to settle long-pending Price Differential Claims (PDCs) exceeding Rs66 billion.
The assurance came during a high-level meeting between OGRA’s newly appointed leadership and chief executives of more than 30 oil marketing companies. Industry representatives described the discussions as constructive, expressing hope that years of unresolved financial and regulatory issues could finally move toward resolution.
Representatives of the Oil Companies Advisory Council (OCAC) and the Oil Marketing Association of Pakistan (OMAP) urged the regulator to expedite the clearance of outstanding PDCs, arguing that delayed payments have placed significant financial pressure on the petroleum sector. They also requested a simpler verification mechanism based on purchase records instead of the existing process to accelerate claim settlements and reduce disputes.
OGRA agreed to share revised terms of reference for the verification process along with an implementation schedule for clearing the pending claims. The meeting also addressed other industry concerns, including revisions to OMC marketing margins, recovery of investments made in mandatory digitalisation projects and sales tax-related issues. These matters are expected to be discussed separately in future consultations.
Industry leaders warned that unresolved PDCs, frozen marketing margins, increasing operational expenses and policy uncertainty continue to weaken the financial health of the downstream petroleum industry. They stressed that resolving these challenges is essential for maintaining uninterrupted fuel supplies and restoring investor confidence.
Outstanding PDCs currently stand at approximately Rs66.7 billion, tying up significant working capital. Although petroleum refineries have already contributed more than Rs7 billion toward reducing the outstanding amount, companies say the remaining burden continues to affect cash flow.
Oil marketing companies also highlighted that their marketing margins have not been revised since late 2023 despite rising inflation, higher financing costs, increased compliance requirements and mandatory fuel stockholding obligations. In addition, companies have invested nearly Rs1.2 billion in digitalisation initiatives that are now linked to the regulator’s margin framework.
The industry also raised concerns over repeated changes to petroleum pricing policies. Between March and June 2026, the pricing formula for motor spirit and high-speed diesel was revised several times without prior consultation, exposing companies to substantial financial losses. Industry estimates suggest that a single pricing revision in June resulted in an exposure of around Rs104 billion due to the large volume of fuel inventories maintained under mandatory strategic stock requirements.
In a separate development, the government has approved the supply of locally produced natural gas to Agritech and Fatima Fertiliser, replacing expensive imported liquefied natural gas (LNG). The move is expected to save nearly Rs16 billion in potential price differential claims while helping ensure stable urea production.
The Economic Coordination Committee directed that the financial benefit of cheaper domestic gas should be passed on to farmers through lower fertiliser prices.
According to the Ministry of National Food Security and Research, Pakistan’s 10 operational urea plants have sufficient combined production capacity to meet domestic demand if uninterrupted gas supplies are maintained. Authorities warned, however, that any shutdown of gas-dependent fertiliser plants during the current crop season could create supply shortages and trigger higher urea prices later this year.
