Regulator's inaction pushes Pakistan's oil sector to the brink

Islamabad [Pakistan], January 16 (ANI): The Oil Companies Advisory Council (OCAC) has sharply criticised the sector's regulator for failing to implement the government's approved increase in margins for oil marketing companies, while simultaneously insisting on full recovery of digitisation-related investments. The industry has warned that the continued delay is worsening the financial stress already faced by companies operating on stagnant margins, as reported by The Express Tribune.
According to The Express Tribune, in a letter addressed to the chairman of the Oil and Gas Regulatory Authority (OGRA), OCAC highlighted the absence of any official notification regarding the Economic Coordination Committee's (ECC) decision to raise margins for motor spirit (MS) and high-speed diesel (HSD).
The industry noted that the ECC had approved a 50 per cent increase, equivalent to PKR 0.61 per litre out of a total PKR 1.22, to be implemented from December 15, 2025, with the remaining linked to the completion of digitisation.
However, the federal cabinet has now tied the entire increment to achieving 100 per cent digitisation, effectively delaying even the initially approved hike.
OCAC stated that margins have remained unchanged for over two years, despite escalating operational, financial, compliance, and mandatory digitisation costs.
The council urged OGRA to raise this concern with the Ministry of Energy and the federal cabinet to ensure immediate notification of at least half of the approved increase.
Regarding digitisation, OCAC reiterated its earlier proposal for a dedicated "Digitisation Fund" within the MS and HSD pricing structure.
This fund would function like statutory levies and reimburse companies through milestone-based releases verified through implementation.
Under the proposed structure, a combined PKR 2.56 per litre margin split equally between MS and HSD would cover both dealer and OMC investments.
OCAC recommended that the fund be jointly overseen by OGRA and the Petroleum Division, as cited by The Express Tribune.
The council also sought urgent reimbursement for investments already made in auto tank gauging (ATG) systems and contributions to the track-and-trace system.
It further suggested continuation of the recovery mechanism until 2030, allowing for maintenance and technological upgrades, as reported by The Express Tribune. (ANI)