Pakistan’s oil marketing companies have urged the government to establish a financially viable cost-recovery mechanism before implementing a nationwide fuel station digitization program, according to a letter shared with Arab News on Wednesday. The Oil Companies Advisory Council (OCAC), representing the country’s downstream oil industry, warned that the initiative could require investments exceeding Rs50 billion, or roughly $178 million. The digitization effort is centered on installing Auto Tank Gauging systems and digital fuel dispensers across all retail outlets to modernize Pakistan’s fuel supply chain.
Auto Tank Gauging systems provide real-time monitoring of underground fuel tanks, helping prevent leakages, theft, and misreporting. Such systems are standard in more regulated energy markets but involve custom-built solutions for each site. OCAC highlighted that implementing these systems nationwide is a complex and costly process, with a single digital dispenser costing approximately Rs2.5 million and an ATG system reaching up to Rs5 million per outlet with two storage tanks. These figures underscore the financial challenge for oil marketing companies, whose retail fuel margins have remained largely stagnant over the past two years.
In a letter dated December 2, OCAC Chairman Adil Khattak urged Pakistan’s federal energy regulator, OGRA, to finalize a clear and implementable framework for compensating companies for the required capital expenditure. The appeal followed a meeting on December 1 in Islamabad where OGRA discussed the rollout of ATG systems and digital monitoring tools with chief executives of oil marketing companies. While supporting the government’s objective of improving oversight at the retail level, OCAC emphasized that implementation should be gradual, recommending a realistic five-year window for the industry to execute the transition effectively.
OCAC also pointed out that each ATG system requires specialized procurement, installation, and calibration, further increasing complexity and costs. Khattak warned that without a confirmed cost recovery framework, companies would be unable to commit to the large-scale financial exposure demanded by the nationwide rollout. He urged OGRA to share the proposed cost-recovery plan as soon as possible and schedule dedicated meetings to understand the industry’s operational constraints. The downstream sector, which includes both local and international firms such as Wafi Energy and Parco Gunvor Limited, stresses that early clarity on cost recovery is essential for planning and financing the modernization effort while maintaining the financial stability of retail operations.
The call by OCAC highlights the challenges of digitizing Pakistan’s energy infrastructure while balancing regulatory oversight and industry sustainability. Proper coordination between the regulator and private companies is expected to play a key role in ensuring that the transition to digital monitoring tools is both feasible and financially responsible, allowing the sector to modernize without undue pressure on operating margins or service delivery.
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