KARACHI: Pakistan’s oil marketing sector has urged the government to approve a revised margin of Rs10 per litre for Oil Marketing Companies (OMCs), warning that delays in adjustments are jeopardizing the sector’s financial stability.
In a letter to the Minister for Petroleum, the Oil Companies Advisory Council (OCAC) highlighted that the last OMC margin revision was implemented in September 2023, setting the rate at Rs7.87 per litre. A scheduled revision for September 2024 remains pending, despite rising operational costs.
OCAC originally proposed a revised margin of Rs12.65 in June 2024, citing increased expenses related to maintaining a 20-day stock cover, turnover tax, demurrage charges, unadjusted GST, and operational overheads. However, following consultations with the Oil and Gas Regulatory Authority (OGRA) and the Petroleum Division, the industry has revised its request to Rs10 per litre and has sought recovery of GST and demurrage via the Inland Freight Equalisation Margin (IFEM).
While the Economic Coordination Committee (ECC) approved GST recovery through IFEM, the accompanying margin adjustment was not addressed, OCAC stated. It emphasized that this delay has resulted in significant financial losses for OMCs and urged immediate approval of the revised margin to avert further stress.
The council acknowledged the government’s role in facilitating GST recovery through IFEM, noting that this intervention eased financial pressure and reaffirmed the administration’s commitment to supporting the downstream oil sector.
OCAC further called on the minister to incorporate the GST exemption into the upcoming Finance Bill, stressing that both the margin adjustment and formalization of tax relief are critical to maintaining fuel supply continuity and sustaining investor confidence, especially under the Pakistan Oil Refining Policy, 2023.
Story by Tanveer Malik
