Wednesday June 29, 2022

Oil sector seeks ministry intervention for release of PDCs

April 06, 2022

KARACHI: Oil Companies Advisory Council (OCAC) has sought the intervention of the Ministry of Energy to immediately reimburse price differential claim (PDC) to keep the import of petroleum products smooth in the country.

OCAC in a letter to the secretary, Ministry of Energy-Petroleum Division on Tuesday pointed out that PDC continued to increase due to rising oil prices on the back of the Ukraine situation and the soaring US dollar.

OCAC appreciated the ministry for getting timely disbursement of the PDC implemented; however, it pointed out the issues that were causing delay in the payment.

Although an amount Rs11.73 billion was allocated and approved for PDC of March 16-31, 2022, the amount was yet to be transferred to the assigned account managed by the Pakistan State Oil, the letter pointed out.

“Due to further increase in prices of petroleum products internationally, the amount of PDC was estimated at Rs34 billion for the period April 1-15, 2022; however, till date approval for the same from the competent authority has not been initiated,” it disclosed.

It sought a decision and clarity on this amount to ensure the industry imports remained on track and the supply kept smooth.

OCAC also noted that despite the approval of the reimbursement procedure from the Economic Coordination Committee (ECC) and ratification by the cabinet, a requirement for review / validation by Accountant General of Pakistan Revenues (AGPR) has been added in the process.

“This delays the reimbursement process; which is now putting additional pressure on an already stretched financial position of the marketing companies,” the oil body said.

About diesel pricing, OCAC said that industry proposal to benchmark premium on high speed diesel (HSD) imports to PSO’s latest tendered premium has been approved by the ECC, but not ratified by the cabinet. The difference between the current announced premium and the market was a huge Rs6.96 per liter on import of HSD.

With the diesel season approaching, OCAC noted this anomaly needed an immediate resolution.

“This will be an approximate 5 percent increase for the consumer which is not significant compared to the risk this represents to the country’s supply security,” it said.

OCAC requested secretary petroleum division to help the industry in timely resolution of these issues to ensure petroleum product availability during this crucial period.