The government on Tuesday released Rs 20 billion for payment of price differential claim (PDC) to oil marketing companies and refineries. Sources told Business Recorder that the Finance Ministry released the money to help OMCs and refineries have funds to purchase more oil stocks from their respective sources and ensure better supply of oil products to local market.

The payment of Rs 20 billion PDC will also, for the time being, ease pressure on the government for clearance of OMCs' outstanding dues. The OMCs were paid Rs 20 billion a few days back in addition to another equal amount that was paid to them as PDC last month.

The OMCs are under pressure as a result of the government policy of capping petroleum product prices since May 2007. The policy of not passing on the actual prices of petroleum products has resulted in building up of huge PDC.

The OMCs and refineries repeatedly claimed during the last couple of months that piling up of PDC has hit their liquidity position badly and they do not have enough money to buy oil from their resources to maintain supply position. They claimed that outstanding PDC as on June 15 stood at Rs 72 billion.

Copyright Business Recorder, 2008