Tuesday April 23, 2024

Government initiates fuel subsidy payment process

By Our Correspondent
March 20, 2022

KARACHI: Petroleum authorities have activated the process of fuel subsidy payment to oil sector to ensure smooth supply of petrol and diesel at prices frozen by the government for until next budget to calm down inflation-broken public.

Oil & Gas Regulatory Authority (OGRA) has sought the Price Differential Claims (PDCs) from oil marketing companies (OMCs) and refineries for the period of March 01 to 15, 2022 for payment, The News has learnt.

According to letter written to Oil Companies Advisory Council (OCAC), a copy of which is available with The News, the regulator asked OMCs and refineries to submit two sets of sales-based PDCs, signed by their CEOs/MDs, and verified by external auditors of the companies.

OGRA has also sought sales certificates, local purchase invoices, upliftment, import papers, and other relevant documents for consolidation of claims for their submission to reimburse PDCs.

Moreover, pending claims for the period of November 01-04, have also been required from the oil marketers/refineries, which would be now be paid as per the mechanism put in place by government.

OGRA said PDC claims received from the companies would be audited Auditor General of Pakistan. On Friday, President of Pakistan sanctioned Rs20 billion for its placement in Assignment Account for reimbursement to OMCs and refineries.

According to the estimates worked out by the oil sector, the claims of PDC for the fortnight came in at Rs28 billion, based on the prices of diesel and petrol in the global market and their local prices.

PDC was worked out at Rs34 and Rs22 per litre for diesel and petrol, respectively, for the aforementioned period. The ex-refinery price of diesel for the next fortnightly review was calculated at Rs170.71/litre, compared to Rs136.61/litre in the last review.

Whereas, the ex-refinery price of petrol was at Rs157.51/litre on March 15 against Rs135.23/litre in the last fortnightly review.

Economic Coordination Committee (ECC) approved a revised mechanism for the payment of PDC. According to the summary of Petroleum Division, oil prices increased in the fortnight under review, with Arab Light Crude hitting $118/bbl, thereby OGRA has estimated the PDC at Rs31.73 billion (Rs2.60 billion for 1-4 Nov, 2021 and Rs29.13 billion for March 2022) as against the allocated sum of Rs20 billion.

Therefore, there was a need for additional Rs11.73 billion through a supplementary grant, the summary indicted. ECC, while approving the summary, consented to revised mechanism under which PDC would be applicable on sale of petroleum products rather than procurement. The committee also accepted Petroleum Division’s demand for additional Rs11.73 billion through supplementary grant to meet expenditure on payment of PDC up to 31 March, 2022.