The Oil Companies Advisory Council (OCAC) has recently written a letter to the Petroleum Division, urging the repayment of Rs. 10 billion in price differential claims (PDC) on petroleum products. These claims have been pending since 2008, causing significant losses for the oil industry. This article explores the background of the PDC, highlights the challenges faced by the industry, and emphasizes the need for prompt reimbursement in the upcoming budget.
Understanding the Price Differential Claims (PDC) and Industry’s Subsidy
Between 2004 and 2008, the government implemented the Price Differential Claims (PDC) scheme, which provided a subsidy of Rs. 291 billion on petroleum products to benefit consumers. However, while the government has reimbursed Rs. 281 billion of this subsidy, there remains an outstanding amount of Rs. 10 billion owed to the oil industry. This delay in repayment has persisted for over 15 years, during which the Pakistani rupee has weakened by approximately 78 percent.
Industry’s Plea for Repayment
The Oil Companies Advisory Council (OCAC) expressed its concerns over the long-standing pending amount and its detrimental impact on the industry. The council has requested the Petroleum Division to assist in recovering the outstanding Rs. 10 billion. The industry is facing significant financial losses due to this delay, and the burden is becoming increasingly difficult to bear. In light of this, the council has urged the government to allocate the pending amount for reimbursement in the next budget to alleviate the sector’s additional burdens.
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Unaddressed Requests and Lingering Doubt
Despite previous requests to the government, the issue of pending reimbursements has remained unresolved for many years. The oil industry players, understandably, have developed little faith in the timely repayment of the outstanding amount. The lack of attention to this matter has further exacerbated the challenges faced by the industry.
Comparison with Partial Payments and Ongoing Delay
In March 2022, the previous government introduced a cap on local petroleum rates before leaving office in April. While partial payments amounting to Rs. 244 billion of the accumulated PDC were made last year, the pending amount from 2008 remains unpaid to this day. This stark contrast highlights the need for prompt action to resolve this long-overdue issue.
Conclusion
The Oil Companies Advisory Council’s recent letter to the Petroleum Division highlights the urgent need for the repayment of the Rs. 10 billion outstanding price differential claims (PDC) on petroleum products. With the industry already burdened by significant losses due to the prolonged delay, it is imperative that the government addresses this matter promptly. Allocating the pending amount for reimbursement in the upcoming budget will provide much-needed relief to the oil sector, fostering stability and growth. It is crucial that the government acknowledges the industry’s plea and takes decisive action to resolve this issue, ensuring a fair and sustainable environment for all stakeholders involved.
