PDC burden may disrupt fuel supply
A worker fills a car's tank at a fuel station amid concerns about rising fuel prices linked to the US-Israel conflict with Iran. Photo: Reuters (file)
The Oil Marketing Association of Pakistan (OMAP) has warned that the current Price Differential Claims (PDC) mechanism could lead to fuel supply disruptions, calling for immediate policy intervention to address mounting financial and operational challenges faced by oil marketing companies (OMCs), according to a statement issued on Tuesday.
In separate communications to Federal Minister for Energy Ali Pervaiz Malik and the chairman of the Oil and Gas Regulatory Authority, OMAP Chairman Tariq Wazir Ali highlighted the "increasingly unsustainable situation" confronting the downstream petroleum sector.
While acknowledging the government's efforts to maintain price stability and market discipline during a challenging regional environment, the association said these measures had helped safeguard the national economy and ensure energy availability.
However, OMAP said the current structure and administration of the PDC was placing an extraordinary burden on OMCs. According to the association, PDC levels have reached approximately Rs78 per litre on petrol and Rs176 per litre on diesel, significantly eroding margins and effectively turning OMCs into financial intermediaries for price stabilisation without adequate support mechanisms. Frequent and unpredictable weekly price adjustments have further compounded the problem, making financial planning, inventory management and pricing strategies increasingly difficult. The association recommended reverting to a more predictable pricing cycle and ensuring timely reimbursement of claims to reduce uncertainty.
The situation is particularly critical for small and emerging OMCs, many of which are now at risk of operational shutdown. This could lead to reduced competition, supply bottlenecks and broader implications for fuel availability.
To address these challenges, OMAP proposed measures including a centralised PDC management mechanism through the State Bank of Pakistan, extended payment timelines of up to 15 days, facilitation of low-cost financing by commercial banks, and immediate release of approved margins.