Islamabad — December 11: Pakistan’s oil industry is facing a potential collapse after years of regulatory shortcomings and government inaction left critical operational, fiscal and structural problems unresolved, the Oil Companies Advisory Council (OCAC) warned.
In a letter to the Oil and Gas Regulatory Authority (Ogra) chairman, copied to the petroleum minister, OCAC Secretary General Syed Nazir A Zaidi detailed the sector’s worsening condition and urged immediate intervention. The council said repeated meetings involving the Petroleum Division, Ogra and oil marketing companies (OMCs) have produced little progress.
OCAC highlighted several urgent issues: about PKR 73 billion in GST refunds have been held by the Federal Board of Revenue (FBR) since April 2022, severely constraining industry liquidity. The council asked for a clear reimbursement mechanism that covers financing costs, recommending rates set at Kibor plus 2%.
The council also criticized the exchange-loss recovery process as “non-transparent” and “unequal,” saying the absence of a standard, timely adjustment formula from Ogra has left many companies uncompensated amid volatile currency swings. Although the petroleum minister directed Ogra to resolve these claims, the regulator has yet to deliver concrete outcomes.
OCAC warned that the rushed roll-out of phase-3 retail digitisation—with tight timelines and no cost-recovery provisions—is straining operations. It also flagged deteriorating conditions at the Fotco terminal, including limited night navigation and inadequate pipeline infrastructure, which are generating costly demurrage charges.
The council urged Ogra to work with port authorities and stakeholders to design practical, transparent remedies. Without swift, coordinated action, OCAC says Pakistan risks severe and prolonged disruption to its oil supply chain, a development that could deepen the country’s energy crisis.
This report is based on coverage by The Express Tribune and was distributed via a syndicated news feed.
