By SKM
December 10, 2025
ISLAMABAD: Pakistan’s downstream oil sector is teetering on the edge as a Rs73 billion GST refund backlog for oil marketing companies (OMCs) combines with a deepening refinery crisis since July 2025, threatening nationwide fuel stability.
In a stern communication to the Oil & Gas Regulatory Authority (OGRA), the Oil Companies Advisory Council (OCAC) warned that liquidity crunches, operational strain, and declining production capacity have pushed the sector to a breaking point.
Refineries are struggling with blocked working capital, soaring financing costs, and shrinking crude procurement, as banks limit exposure amid the unresolved GST refunds. If left unaddressed, the crisis could trigger production cuts, higher imports, and fuel price spikes.
OCAC highlighted the outdated exchange loss formula, calling for a transparent, time-bound adjustment mechanism, and cautioned that Phase 3 of OGRA’s digitization drive could overburden the sector without a clear cost-recovery plan.
Port bottlenecks at FOTCO, including limited channel depth and lack of a dedicated gasoline pipeline, have caused vessel delays and mounting demurrage costs, further straining operations.
OCAC urged OGRA to convene an emergency stakeholder meeting to finalize recovery frameworks and timelines, warning that the combined pressures of the GST backlog, refinery downturn, and financial distortions could jeopardize Pakistan’s fuel security. Ends
