Refineries face Rs 25 billion inventory losses

Aftab Ahmed

With claims of facing over Rs 25 billion inventory losses, oil refineries have requested the government to defer payment of petroleum development levy (PDL) for six months till November this year.

Refineries claim that they have suffered huge Inventory losses during the last two months and these losses may increase further in the coming months. They have requested the government to provide temporary monetary support to Individual Refineries which shall be subsequently returned.

They said that payment of monthly PDL which is due on the 15th of every month is deferred for a period of 06 months, for each month starting from May, 2020; i.e. Payment of May 2020 shall be paid in November, 2020 & so on.

“For transparency purposes, Refineries claim for Inventory losses may be Audited by Statutory Auditors of the respective Refineries, they said adding that they have been suffering massive losses during the last two years on account of various factors.

On top of it, due to Covid – 19, prices and demand of Petroleum Products have drastically reduced, thus seriously impacting upliftment from Local Refineries and have adversely affected Refineries’ Profitability which needs to be addressed on an urgent basis, otherwise, Refineries’ survival is at stake.

Refineries were carrying huge inventory acquired at a higher cost and then prices were reduced on March 25, 2020, resulting in substantial Inventory losses of over Rs 25 billion.