ISLAMABAD – Pakistan’s decision to move to a daily petroleum pricing mechanism triggered fresh concerns across the oil marketing industry, with smaller oil companies warning that the policy could deepen their financial troubles unless the government urgently steps in.
The federal government announced that petroleum product prices will now be determined on a daily basis, citing heightened geopolitical uncertainty following the recent exchange of strikes between US and Iran. The move comes as global oil markets remain volatile, raising fears of further fluctuations in fuel prices.
Oil Marketing Association of Pakistan (OMAP) warned that emerging and smaller oil marketing companies (OMCs) are already under severe financial stress and may struggle to withstand more frequent price revisions.
In a letter to Petroleum Minister Ali Pervaiz Malik, OMAP Chairman Tariq Wazir Ali said the industry is facing mounting pressure due to stagnant marketing margins, delayed government payments, and recurring inventory losses linked to fuel price adjustments.
A key concern highlighted by the association is the government’s failure to clear approximately Rs. 66.7 billion in outstanding Price Differential Claims (PDCs) owed to smaller OMCs. According to OMAP, the delayed payments have created a serious liquidity crunch, restricting companies’ ability to open letters of credit, finance petroleum imports, and secure fuel cargoes at a time when international oil prices are climbing.
Pump owners said all licensed OMCs are legally required to maintain minimum fuel inventories to ensure uninterrupted supplies across the country. However, every unexpected change in fuel prices reduces the value of these mandatory stocks, forcing companies to absorb substantial inventory losses without any compensation.
They criticized the government’s decision to keep OMC marketing margins unchanged since 2023 despite a sharp increase in operating costs, financing expenses, inflation, and regulatory compliance requirements. The association said smaller companies are disproportionately affected because they lack the financial strength and access to low-cost funding available to larger industry players. Warning of wider consequences, OMAP said the combined impact of frozen margins, delayed PDC payments, and repeated inventory losses has evolved into a structural crisis rather than a temporary business challenge.
“If smaller OMCs continue to face these financial pressures, many may be forced to scale back operations or exit the market altogether,” the association cautioned, adding that such an outcome could reduce competition, limit consumer choice, and weaken investor confidence in Pakistan’s downstream petroleum sector.
While reaffirming its support for government efforts to shield consumers from rising fuel prices, OMAP stressed that the cost of such relief should be financed by the government instead of being shifted onto an industry already operating under significant financial strain.
To prevent further deterioration, the association has urged the government to immediately release the outstanding Rs. 66.7 billion in PDC payments through a transparent, time-bound mechanism. It has also called for an urgent revision of OMC marketing margins and the introduction of a formal consultation process before any future changes are made to the petroleum pricing framework.
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