KARACHI – The Oil Companies Advisory Council (OCAC) has called for an immediate revision of oil marketing company (OMC) margins to Rs10 per litre and urged the development of a formal pricing formula in collaboration with the Oil and Gas Regulatory Authority (Ogra), the Ministry of Energy (Petroleum Division), and the oil industry.
In a letter to the Ogra chairperson, the OCAC emphasized the urgent need to revise OMC margins, citing challenges such as fuel smuggling, a high turnover tax, insufficient margins, and escalating operational costs. The council referenced a May 29 meeting with the Petroleum Minister, where it was informed that the Economic Coordination Committee (ECC) had tasked Ogra with preparing a proposal for margin revision.
OCAC’s proposed Rs10 margin is based on Pakistan State Oil’s (PSO) cost structure, previously approved by the ECC in September 2023. The calculation includes financing costs from maintaining a mandatory 20-day stock cover—calculated using an average one-month Kibor rate of 21.91% for FY24—as well as handling losses and operating expenses.
Highlighting a 23.41% rise in the Consumer Price Index (CPI) over the past fiscal year, the OCAC has also factored in a 23% profit margin to reflect inflationary pressures. The council stressed the need for an annually updated margin formula, to be reviewed every July, ensuring fair cost recovery and industry sustainability.
