Islamabad, December 11, 2025 – Pakistan’s oil marketing companies have called on authorities to urgently resolve long-pending sales tax reimbursement issues and other critical challenges affecting the sector’s financial stability.
The Oil Companies Advisory Council (OCAC) has submitted a comprehensive set of proposals to the Oil and Gas Regulatory Authority (OGRA), seeking immediate action.
According to OCAC, industry-wide General Sales Tax (GST) claims totaling Rs. 73 billion remain outstanding with the Federal Board of Revenue (FBR) for the period from April 2022 to June 2024. The council warned that these unpaid claims have severely strained the liquidity of oil companies. While GST claims for FY2024–25 are being reimbursed through the Inland Freight Equalization Margin (IFEM), the industry is still awaiting a formal mechanism for recovering:
1. Outstanding claims from April 2022 to June 2024
2. Claims accruing from July 2025 onwards
In a letter addressed to OGRA Chairman, OCAC Secretary General Dr. Syed Nazir A. Zaidi referenced a meeting held on December 3, 2025, chaired by the Federal Minister for Energy. The meeting—attended by representatives of the Ministry of Energy (Petroleum Division), OGRA, and oil marketing companies—focused on major industry challenges.
The Minister directed OGRA to collaborate closely with OCAC and submit recommendations for onward escalation to the Prime Minister’s Office. Following these instructions, OCAC has proposed the creation of a structured reimbursement mechanism, including the recovery of costs arising from sales tax exemptions (effective July 2025) and financing costs on unadjusted sales tax claims at KIBOR + 2% for refineries and OMCs.
OCAC has also requested urgent action on several other pressing issues:
Exchange Loss Recovery
Oil companies argued that the current exchange loss framework does not compensate for actual losses caused by currency fluctuations. The lack of a transparent and uniform formula, they said, leads to market distortions—particularly when no imports occur in a pricing period. OCAC has urged OGRA to verify all claims and finalize a standardized methodology with timely adjustments built into the pricing mechanism.
Digitisation – Phase 3 Implementation
While supporting OGRA’s digitisation program, the industry raised concerns over accelerated timelines for Phase 3 (site-wise digitisation) and the absence of a cost recovery mechanism. OCAC has asked OGRA to reconsider implementation deadlines and establish a clear framework for reimbursing companies for digitisation-related expenses.
Port Constraints and Demurrage Costs
The council highlighted infrastructure limitations at FOTCO—such as limited channel depth, night navigation restrictions, and the lack of a dedicated motor spirit (MS) pipeline—which frequently result in demurrage costs for importers. OCAC requested OGRA’s assistance in coordinating with port authorities to address bottlenecks and incorporate verifiable demurrage charges into the IFEM-based recovery system.
In line with ministerial directives, OCAC has asked OGRA to convene an immediate meeting with industry stakeholders to finalize timelines, methodologies, and approval procedures for all outstanding issues.