ISLAMABAD: The federal government has budgeted zero Price Differential Claims (PDCs) for next financial year 2022-23 for reimbursement for oil marketing companies (OMCs) and refineries and has decided to pass on full impact of fuel price rise in the international market.

The government revised PDC upward to Rs 250 billion for OMCs and refineries in current financial year 2021-22 following the relief package announced by former Prime Minister Imran Khan on February 28 – a decision widely criticized as it was unfunded and additionally not approved by the cabinet.

However, the federal Cabinet’s Economic Coordination Committee (ECC) on 7th March, 2022 approved the procedure for PDC payment to OMCs and refineries to avoid shortage of petroleum products in the country. The ECC also approved a special PDC payment procedure to pay PDC speedily, as well as opening a special assignment account with Pakistan State Oil (PSO) for withdrawal of PDC by PSO for its own claims and issuance of PDC claims to the other OMCs and refineries.

The Oil Companies Advisory Council (OCAC) a representative body of OMCs and refineries had repeatedly asked the Petroleum Division to reimburse Rs 250 billion worth PDC of OMCs and refineries ostensibly in order to ensure the energy security of the country.

The OCAC further warned that if the government delays clearing the pending amount of PDC then the entire oil industry and fuel supply chain of the country would collapse and the energy security of the country would be at risk. They said the value of the dollar against Pak rupee was increasing with each passing day while the limit of letter of credit (LC) is exhausting so the entire supply chain of the country was at serious risk, said sources.

Copyright Business Recorder, 2022