Oil Industry Seeks PM’s Intervention Over Rs. 66 Billion Claims, Opposes Windfall Tax

Pakistan’s oil industry has sought Prime Minister Shehbaz Sharif’s intervention over what it describes as mounting financial pressures, calling for the immediate release of Rs. 66 billion in outstanding price differential claims (PDCs) and has also opposed the proposed tax on windfall inventory gains in the upcoming budget.

In a letter to the prime minister, the Oil Companies Advisory Council (OCAC), which represents oil marketing companies and refineries, requested an urgent meeting with the leadership of the country’s top oil sector firms.

OCAC Chairman Asif Iqbal said the industry was facing severe liquidity constraints due to delayed claim settlements, rising operating costs, increasing compliance requirements, and policy uncertainty.

The industry said around Rs. 54 billion in PDCs had already been released, but claims worth approximately Rs. 66 billion remain outstanding. According to OCAC, the delayed payments relate to compensation for supplying petroleum products at lower prices during the early stages of the US-Iran conflict.

The council urged the Oil and Gas Regulatory Authority (Ogra) to ensure that all remaining verified claims are settled by June 8 to ease pressure on company cash flows.

The oil sector also objected to proposals being considered for taxing inventory gains resulting from increases in international oil prices. OCAC argued that if the government seeks to recover gains earned during periods of rising prices, it should also recognize inventory losses when global oil prices decline.

The council noted that oil marketing companies are already required to maintain a mandatory 20-day stock cover under existing regulations.

Another concern raised by the industry relates to marketing margins, which have remained unchanged since September 2023 despite inflation and higher operating expenses. The council said the lack of margin adjustments has weakened profitability and constrained investment in fuel infrastructure. It called for the introduction of a transparent annual mechanism for revising margins.

The industry further criticized the requirement to install Level-3 fast electric vehicle chargers at fuel stations, describing the mandate as commercially unviable given the limited adoption of electric vehicles in Pakistan. OCAC said the high cost of installation, combined with the absence of supporting infrastructure and local manufacturing, makes large-scale deployment difficult at this stage.

The council also expressed concerns over regulatory requirements linking approvals for new fuel stations to the installation of EV charging facilities. According to the industry, the condition has delayed the launch of completed retail outlets, discouraged new investment, and diverted capital away from core infrastructure projects.