KARACHI, Oct 17: In a bid to curtail the foreign exchange outflow, the Oil Companies Advisory Committee (OCAC) has asked the government to gradually reduce imports of high speed diesel in November/December to bring down the current days’ cover of over 35 days to 15 days by December 31, 2008.

The reduction in imports of HSD would yield a saving of $200 million at current level of international prices, says a press release of the OCAC.

The committee has suggested the government after carrying out an analysis for saving foreign exchange.

This analysis, it must be understood, is based on maximizing product availability from the local refineries, most of them are already operating below normal capacity because of the aforementioned reasons as well as the losses incurred due to modifications in the Refinery Pricing Formula, especially for Motor Gasoline which defies all economic logic, the committee said.

Although, as of October 16, 2008 the PDC (Price Differential Claims) element has been eliminated, outstanding claims of Rs50 billion (inclusive of Financial Charges) are still due to the industry from the government.

In addition to the PDC, there are outstanding payments from oil marketing companies (OMCs), customers (Power Plants and others) to the tune of over Rs60 billion.

As a result, overdue payments to the refineries by the OMCs have reached a staggering figure of over Rs 60 billion.

This circular debt is untenable and the OCAC has requested the government to address this serious situation in order to avoid any supply disruptions.