Shell and other private oil companies have expressed their inability to pay to the refineries for purchase of oil from December 1, saying the financing crunch due to rising prices in the international market and outstanding differential was becoming unmanageable for them.
The private sector Oil Marketing Companies (OMCs) in its letter addressed to Finance Secretary, Ahmed Waqar, said, "We have been facing acute financial crunch due to non-payment of differential on oil products prices by the government and if the present situation continued beyond December 1 it will make literally impossible for us to pay the refineries for oil purchase and ensure supply to the market beyond December 1."
The OMCs have been pressing the government for last many months for the payment of their outstanding amount as differential on the prices, but so far they have failed to make their point.
Since the government is strictly following the policy of capping the prices of oil products to avoid criticism from the public, it absorbs some potion of the actual prices in terms of taxes but it is supposed to pay OMCs differential on actual and selling prices. This amount differential now stands at roughly Rs 37 billion rupees and by the end of the current month its total volume will be around Rs 41 billion.
Although major portion of outstanding amount rests with Pakistan State Oil (PSO) which being a public sector company can not forcefully demand for early payment. But Shell and other private sector companies are in real trouble. Their headquarters are pressing them everyday to take the matter with the government authorities seriously and get the outstanding payment to finance oil purchase operation.
Since OMCs work on commercial line they can not afford piling up outstanding amount just as a token of love for the government of Pakistan. Their letter to the Finance Secretary is indicative of level of desperation and pressure they are now facing from their headquarters.