Price differential claims of OMCs/refineries: Rs68.81bn supplementary grant approved by ECC

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved Rs68.81 billion supplementary grant for disbursement of price differential claims (PDCs) to OMCs/ refineries for the month of April and to meet the shortfall of Rs1.87 billion for the month of March 2022.

Miftah Ismail presided over the first meeting of the ECC on Tuesday after assuming the office of Finance Minister.

Ismail took up one-point agenda of the Petroleum Division’s proposal seeking allocation of fund through a supplementary grant to clear the price differential claims of the OMCs and refineries.

The meeting was informed that due to the continuous rising trend of oil prices in the international market, the quantum of subsidy for the month of April 2022 has been higher than of March 2022.

The meeting was informed in order to implement relief package announced by the former prime minister on February 28, reduction in the consumer price of Motor Spirit and high speed diesel by Rs10 per litre at the level notified on 1st March, the rate of Petroleum levy and sales tax on motor speed and high speed diesel was brought down to zero percent.

Rs100bn financial support: ECC refuses to entertain PD’s proposal

Price differential claims of oil marketing companies (OMCs)/ refineries in the amount of approximately Rs32.07 billion were estimated for the month of March 2022 (including PDC of earlier period from 1-4, November 2011 and this price differential is to be paid to the oil marketing companies/ refineries by the government as a subsidy.

On the summaries of the Petroleum Division, the ECC of 7th March 2022 and 16th March 2022 approved allocation of Rs20 billion and Rs11.73 billion, respectively for reimbursement of price differential claim to OMC and refineries.

The Petroleum Division further stated in the proposal that as OGRA has projected that owing to rising trend of oil prices in the international market, the PDC for the first and second fortnights of April 2022 is Rs31.80 billion and Rs35.73 billion, respectively.

A draft summary with proposal to allocate Rs67.53 billion for the month of April 2022 was circulated to the Finance for comments and the Finance Division supported the OGRA projection of Rs31.80 billion for the 1st fortnight of April 2022 and did not support allocation for 2nd fortnight due to lack of fiscal space

The ECC was further informed that the OGRA vide letter dated 18th April 2022 has now projected PDC for the first and second fortnight of April 2022 of Rs31.80 billion and Rs34.44 billion respectively. In addition, the OGRA informed that the amount of PDC provided through supplementary grant for the month of March 2022 has fallen short by Rs1.87 billion, therefore, the ECC was requested that Rs68.81 billion may be allocated through supplementary grant for disbursement of PDC to OMCs/ refineries for the month of April and to meet the shortfall for the month of March 2022.

Federal Minister for Industries and Production Makhdoom Syed Murtaza Mehmood, federal secretaries and senior officers attended the meeting.

Copyright Business Recorder, 2022