Pakistan's oil industry teeters on the brink of collapse, battered by prolonged regulatory neglect and governmental indifference. Years of unresolved operational, fiscal, and structural woes have pushed the sector to a critical juncture, threatening the nation's energy security.

The Oil Companies Advisory Council (OCAC) has issued a stark warning, directing its concerns to the Oil and Gas Regulatory Authority (OGRA). In a letter from Secretary General Syed Nazir A Zaidi, copied to the petroleum minister, the council detailed a cascade of failures plaguing oil marketing companies (OMCs).

Despite multiple rounds of talks involving the Ministry of Energy's Petroleum Division, Ogra, and industry stakeholders, progress remains elusive. The Express Tribune reports that these discussions have yielded little beyond rhetoric, leaving core issues festering.

At the heart of the crisis lies a staggering PKR 73 billion in GST refunds, stuck with the Federal Board of Revenue (FBR) since April 2022. This backlog has crippled industry liquidity, forcing companies to shoulder massive financial burdens without relief.

OCAC demands a robust reimbursement framework, one that incorporates financing costs calculated at the Karachi Inter-Bank Offered Rate (KIBOR) plus 2 per cent. Without such measures, OMCs face mounting debts that erode their operational viability.

Exchange rate losses compound the misery, with OGRA's recovery mechanism branded as non-transparent and inequitable. Industry voices argue that the absence of a standardised, timely adjustment formula has left many firms uncompensated amid Pakistan's volatile currency fluctuations.

The petroleum minister previously instructed OGRA to expedite resolutions, yet the regulator has failed to act decisively. This inertia has allowed discrepancies to persist, unfairly penalising some players while others benefit from ad hoc adjustments.

Government-mandated digitisation efforts, particularly phase-3 of the retail outlet project, add further strain. Rushed timelines and the lack of cost-recovery provisions have overwhelmed OMCs, disrupting daily operations across the country.

Port inefficiencies at facilities like Fotco exacerbate the turmoil. Limited night navigation capabilities and inadequate pipeline infrastructure result in exorbitant demurrage charges, inflating costs for importers and distributors alike.

OCAC has called on Ogra to broker solutions with port authorities and stakeholders, insisting on practical, transparent fixes. Delays here risk paralysing the supply chain, as vessels linger unable to offload efficiently.

These intertwined challenges—fiscal arrears, opaque policies, digital overhauls, and logistical bottlenecks—signal systemic rot. The oil industry's liquidity crunch now imperils fuel availability, with ripple effects poised to deepen Pakistan's chronic energy shortages.

OMCs warn that without swift intervention, supply disruptions loom large. Retail shortages could spike prices, hammer consumers, and trigger broader economic fallout in a nation already grappling with inflation and instability.

The Petroleum Division's silence speaks volumes, as does Ogra's reluctance to enforce accountability. Repeated pleas from OCAC highlight a regulatory apparatus more adept at evasion than resolution.

Historical patterns of neglect amplify the peril. Pakistan's oil sector has long suffered from circular debt cycles and import dependency, vulnerabilities now amplified by governance lapses.

Stakeholders urge the creation of an empowered task force to address refunds, standardise exchange adjustments, and overhaul port operations. Yet, political distractions and fiscal constraints cast doubt on any rapid turnaround.

As the crisis escalates, international partners watch warily. Pakistan's faltering oil infrastructure could deter investment, undermining efforts to diversify energy sources amid dwindling reserves.

Consumers bear the immediate brunt, facing potential fuel scarcity and price hikes. Industries reliant on steady petroleum supplies, from transport to manufacturing, risk shutdowns that could stall economic recovery.

OCAC's missive serves as a final clarion call. Immediate, coordinated action from Ogra, the ministry, and FBR offers the only path to avert catastrophe, preserving an industry vital to Pakistan's survival.

Failure to heed this alarm promises not just sectoral collapse, but a profound escalation of the country's energy woes.

Based On ANI Report