Oil Sector Demands 27% Increase in OMC Margins

The oil sector has demanded a Rs. 10 per litre margin for oil marketing companies, 27 percent higher than the current rate of Rs. 7.87 per litre. In a letter to the Minister for Petroleum, the Oil Companies Advisory Council (OCAC) reminded the government that back in June 2024, the industry had initially recommended a margin of Rs. 12.65 per litre based on actual cost pressures. These included financing for maintaining 20 days of stock, turnover tax, handling losses, demurrage, unadjusted GST up to June 2024, and other operational expenses. After discussions with the Petroleum Division and the Oil and Gas Regulatory Authority, the industry revised its request. It now seeks a margin of Rs. 10 per litre and recovery of demurrage and unadjusted GST costs through the Inland Freight Equalisation Margin. The council noted that while the Economic Coordination Committee approved GST recovery through IFEM, the margin revision was not considered. It requested the minister to approve the revised rate immediately to prevent further financial damage. The council further urged that the GST exemption be formally included in the Finance Bill 2025. It said both the margin revision and formal exemption are essential for ensuring financial stability in the downstream sector and uninterrupted fuel supply nationwide.