Oil Industry Raises Objections to OGRA’s Proposed PDC Payment Mechanism

Pakistan's oil industry has expressed reservations over the Oil and Gas Regulatory Authority's (OGRA) proposed mechanism for settling Price Differential Claims (PDCs), arguing that the multi-stage process is overly complex and could delay payments amounting to billions of rupees.

 

OGRA has proposed a structured framework for disbursing PDCs to oil marketing companies (OMCs) related to the government's temporary petroleum price stabilisation measures implemented during March and April 2026. The regulator said the mechanism is designed to strengthen transparency, improve internal controls, and ensure that compensation is paid only against verified sales rather than inventory holdings.

 

Under the proposed framework, OMCs would receive 40% of verified claims upon submission of the required documentation and interim claims. A further 25% would be released after completion of documentation requirements, followed by another 25% after an independent audit and verification conducted by auditors appointed by OGRA. The remaining 10% would be paid only after a post-audit by the Auditor General of Pakistan and the resolution of any observations raised by investigative agencies.

 

To support the process, OGRA has also drafted Terms of Reference (ToRs) for appointing an independent chartered accountancy firm to audit, verify, and certify PDC claims. The audit will examine sales volumes, refinery purchases, stock movements, tax payments, banking records, invoices, delivery documents, and other supporting evidence while independently recalculating claims to identify duplicate or unsupported payments.

 

The audit will cover claims arising during the three-week period from March 14 to April 2, 2026, when the government maintained petroleum prices despite sharp fluctuations in international oil markets. The selected audit firm will be required to complete the assignment within 30 days and submit detailed verification reports.

 

While OGRA maintains that the framework will enhance accountability and safeguard public funds, industry representatives argue that the payment structure could adversely affect the liquidity and cash flow of oil marketing companies. They said their concerns have already been raised with the regulator and discussed by a parliamentary standing committee, with further talks scheduled between the oil industry and OGRA on Wednesday.