Industry Warns Govt Delays Could Force Small Pump Owners Out of Business

The Oil Marketing Association of Pakistan (OMAP) has urged the federal government to immediately address a growing financial crisis facing emerging and smaller oil marketing companies (OMCs), warning that continued inaction could weaken competition and disrupt the country’s downstream petroleum sector.

The association also highlighted that around Rs. 66.7 billion in outstanding Price Differential Claims owed to its member companies remain unpaid. According to OMAP, the delay has severely constrained working capital, limiting companies’ ability to open letters of credit, finance imports and secure fuel cargoes at a time of rising international oil prices.

In a letter to Federal Minister for Energy (Petroleum Division) Ali Pervaiz Malik, OMAP Chairman Tariq Wazir Ali said smaller OMCs are under severe financial pressure due to stagnant marketing margins, delayed payment of Price Differential Claims (PDCs), and recurring losses caused by changes in petroleum pricing.

The association said all licensed OMCs are legally required to maintain minimum fuel inventories. However, frequent revisions to fuel prices without prior consultation reduce the value of these mandatory stocks, forcing companies to absorb substantial inventory losses.

OMAP noted that marketing margins have remained unchanged since 2023 despite significant increases in operating expenses, financing costs and regulatory compliance requirements. It said smaller companies are particularly vulnerable because they have limited access to affordable financing compared with larger industry players.

OMAP warned that the combined impact of stagnant margins, delayed claim payments and inventory losses has become a structural challenge for the petroleum sector rather than an isolated business issue. It cautioned that if smaller OMCs are forced to scale back operations or exit the market, Pakistan could face reduced competition, fewer choices for consumers and weaker investor confidence in the energy sector.

While reaffirming its support for government efforts to provide fuel price relief to consumers, the association said such relief should be financed by the government instead of being passed on to an industry already facing significant financial strain.

To address the situation, OMAP called for the immediate release of approximately Rs. 66.7 billion in outstanding PDC payments through a time-bound mechanism, a prompt revision of OMC marketing margins, and the introduction of a formal consultation process before changes are made to the petroleum pricing formula.

The association said it remains committed to working with the Ministry of Energy and the Oil and Gas Regulatory Authority (OGRA) to develop a financially sustainable, competitive and investment-friendly downstream petroleum sector.