The Federal cabinet’s Economic Coordination Committee (ECC) on Monday granted its approval to implement a mechanism of fortnightly reimbursement of Price Differential Claims (PDCs) of the Oil marketing Companies (OMCs) and refineries in order to avert shortage of petroleum products.
According to sources, the Petroleum Division has forwarded a summary to ECC of the cabinet and sought its necessary approval for the fortnightly reimbursement of PDCs of OMCs and refineries. And, a special meeting of the ECC held on Monday has given its important approval to implement the proposed fortnightly reimbursement mechanism of PDC ostensibly in order to avert shortage of petroleum products in the country in the near future.
“The Minister for Energy has seen and authorised submission of the summary with subject ‘Reimbursement of Price Differential Claims of Oil Marketing Companies (OMCs) and Refineries’ to the ECC of the cabinet for consideration and approval,” said sources.
According to available copy of the procedure for payment of PDC for November 1-4, 2021 and March 1st to 30th June, 2022, the finance division will provide permission to open an assignment account to be operated by Pakistan State Oil (PSO) within three days after the approval of PDC payment mechanism by ECC while the division will also allocate and transfer budget in the assignment account as estimates provided by the Oil and Gas Regulatory Authority.
Similarly, within three days of close of fortnight, the Oil Marketing Companies (OMCs) and refineries will submit claims of PDC fortnightly based on the procurement (import and local refineries) of the petroleum products category wise supported with relevant documents duly certified by the external auditor of the OMCs and refineries to OGRA. In addition, refineries and OMCs will subsequently share the sales tax documents with OGRA as soon as these are submitted to FBR for the purpose of audit.
Likewise, OGRA will review the claims and forward to PSO and a copy to the finance and petroleum division within three days of receipt of claims.
Moreover, the PSO will transfer the amount from the assignment account to the designated commercial bank account of the respective OMCs and refineries and keep an auditable record within one day.
Furthermore, the finance division will advise Auditor General of Pakistan (AGP) to conduct audit of the claims and disbursement at the end of scheme on the basis of the record submitted to OGRA including the sales tax documents within a week of the close of financial year while any over payment pointed will be recovered by OGRA.
As per details, the petroleum division, in its summary for ECC, said that a special PDC payment procedure has been developed in consultation with the industry, Oil and Gas Regulatory Authority (OGRA) and Finance Division.
Similarly, the Petroleum Division proposed that a special assignment account may be opened with Pakistan State Oil (PSO) to be used for withdrawal of PDC by PSO for its own claims and issuance of PDC to other OMCs and refineries, in accordance with the proposed mechanism.
Furthermore, it is proposed that initially an amount of Rs 20 billion may be provided through a supplementary grant to PSO in accordance with the mechanism.
“The proposals for further supplementary grants, if any, will be submitted to the ECC, subsequently in accordance with the anticipated requirements, as and when required,” said the sources.
They added that OGRA has also been requested to estimate the amounts required for payment of PDC for the period 1-4 November, 2022, the current fortnight and the next fortnight.
Earlier, OCAC, the representative entity of the industry, had protested to the Petroleum Division for expecting the oil sector to bear the burden of billions under the guise of PDC. It is highly unrealistic and might expose the energy market in the country to serious risks.
