Oil marketing companies (OMCs) and refineries have expressed serious concerns over recent government decisions to reduce fuel prices, warning that continued price cuts without meaningful consultation could push the industry into a financial crisis and threaten Pakistan’s fuel supply chain.
In an emergency letter sent to the government, the Oil Companies Advisory Council (OCAC) urged authorities to refrain from making unilateral decisions on petroleum pricing and called for a transparent consultation process involving all stakeholders before any future price adjustments.
Oil Industry Faces Mounting Financial Pressure
According to OCAC, recent petroleum pricing decisions have significantly affected the financial health of oil marketing companies and refineries.
The council claimed that a new pricing formula has already caused losses of approximately Rs104 billion to OMCs and refineries. These losses have negatively impacted working capital, cash flows, and overall financial stability across the sector.
OCAC warned that if the current pricing policy continues, smaller and financially weaker companies could face bankruptcy, creating wider disruptions in the energy sector.
Concerns Over Fuel Supply Chain
The council cautioned that increasing financial pressure on the industry could eventually affect the country’s fuel supply chain.
Oil marketing companies and refineries invest heavily in fuel imports, storage, transportation, and distribution. OCAC argued that continued financial strain may reduce the industry’s ability to maintain uninterrupted fuel supplies nationwide.
The council stressed that any disruption in fuel availability could have serious consequences for Pakistan’s economy, transportation sector, and industrial operations.
Industry Rejects Burden of Public Relief Measures
OCAC stated that while providing relief to consumers is an important government objective, placing the entire financial burden on the oil industry is unfair and unsustainable.
The council argued that recent price reductions have effectively transferred the cost of consumer relief to oil companies and refineries, despite rising operational and financing expenses.
According to OCAC, a balanced pricing mechanism is needed to protect consumers while also ensuring the long-term viability of the energy sector.
OMC Margins Await Revision
The advisory council also highlighted that profit margins for oil marketing companies have remained under review for nearly two and a half years.
During this period, operating expenses, import costs, financial charges, and other business costs have increased substantially, while margins have not been adjusted accordingly.
OCAC maintained that the current margin structure no longer reflects market realities and is contributing to the industry’s financial difficulties.
Unpaid Dues Add to Financial Stress
Another major concern raised by the council is the non-payment of outstanding dues.
According to OCAC, around Rs66.7 billion in receivables remain unpaid, further increasing financial pressure on oil companies.
The council warned that delays in payments could worsen liquidity challenges and limit the industry’s ability to invest in infrastructure and maintain efficient operations.
Industry Highlights Support for National Priorities
Despite financial difficulties, OCAC said the industry has continued to support national priorities and ensure uninterrupted fuel availability across the country.
The council noted that refineries supplied fuel to Pakistan’s armed forces and Hajj flights at previous prices in the national interest, even when doing so increased their financial burden.
Similarly, oil marketing companies continued supplying fuel across Pakistan, including remote regions, despite rising operational costs.
Call for Immediate Meeting With Petroleum Minister
Given the seriousness of the situation, OCAC has requested an urgent meeting with the Petroleum Minister.
The council is seeking a fair and sustainable pricing framework developed through consultation among the government, regulators, refineries, and oil marketing companies.
OCAC warned that if industry concerns are not addressed, the financial challenges facing the sector could deepen, potentially affecting Pakistan’s energy security and the reliable supply of petroleum products in the future.