Petroleum Companies Ask Govt to Increase Margin on Petrol, Diesel

Oil marketing companies (OMCs) have asked the federal government to increase their margins for MS petrol and high-speed diesel (HSD) due to severe operational issues and financial constraints. In a letter to Chairman OGRA, the Oil Marketing Association of Pakistan (OMAP) requested margins that align with licensing conditions, operational realities, and reasonable shareholder returns. It warned that the petroleum sector is nearing collapse and urgent action is needed to avoid chaos. OMAP said a markup rate of 22 percent per annum makes holding a 20-day stock cost about Rs. 3.45 per litre sold while a 10-day stock requirement add around Rs. 1.50 per litre. The association also noted a 6-10 percent rise in LC confirmation costs over the past year which adds a cost of Rs. 1.61 per litre sold, based on a 60-day LC assumption with an import value of Rs. 200 per litre. The industry faces a turnover tax of 0.5 percent which translates to Rs. 1.37 per litre in operational expenses. Meanwhile, demurrage charges add an estimated Rs. 0.5 per litre sold. OMAP pointed out that operating costs, including selling, marketing, administration, and other expenses, have surged due to inflation, high energy costs, and utility expenses, which makes operations a lot more tedious and expensive. The association also cited a liquidity crunch due to substantial funds tied up in IFEM. Delays in sales tax adjustments and handling costs add another Rs. 2.15 per litre sold. OMAP proposed a revised OMC margin of Rs. 19.52 per litre, arguing that this adjustment is essential for the survival and efficient operation of petrol companies in Pakistan and to ensure that they uphold quality service standards for their customers.