Pakistan’s oil marketing sector could face forced exits and disorderly consolidation if long-standing structural fragmentation is not addressed in time, according to a new report by Dubai-based energy and technology advisory firm Mountain Ventures.
In its report titled Pakistan OMCs Review 2025, Mountain Ventures warned that the sector is showing warning signs similar to those once seen in the US airline industry, which suffered from collapsing margins, underinvestment, repeated bankruptcies and eventual forced mergers.
“Pakistan’s OMC sector now exhibits the same structural warning signs,” the report noted.
Despite having 44 licensed oil marketing companies (OMCs), market concentration remains extremely high. Around 60% of total volumes are controlled by just three players, 95% by ten, and nearly 98.5% by twenty companies. The remaining smaller players lack scale and compete largely through aggressive discounting, which has eroded margins across the industry and weakened incentives to invest in compliance, systems and retail infrastructure.
“Consolidation will happen regardless. The only question is whether it occurs early and orderly, or later through financial stress, exits, and market disruption,” the report warned.
The sector recorded healthy volume growth in 2025, with sales of gasoline, gasoil and hi-octane rising by about 10% year-on-year, from 14.0 million metric tonnes to 15.4 million metric tonnes, driven by vehicle growth and stable demand. However, the report noted that industry economics continued to tighten due to regulated pricing, persistent discounting and rising capital requirements.
It further highlighted that uncertainty around the Infrastructure Development Cess and sales tax recoverability has increased working-capital pressures. At the same time, greater regulatory focus on digitisation and enforcement suggests a shift toward compliance-linked margin relief rather than across-the-board adjustments.
Operationally, the report identified owned storage capacity and the quality of retail networks as major constraints on sustainable growth. Limited gasoline storage capacity is restricting outlet expansion, increasing the importance of optimising existing networks rather than expanding footprints.
The report also pointed to the likely impact of global brands such as Aramco, Gunvor and Wafi Energy, whose entry is expected to raise consumer expectations despite regulated fuel prices. These players are expected to focus on stronger branding, tighter operational controls and more consistent retail formats, setting higher benchmarks for site quality, service and product integrity.
Looking ahead, Mountain Ventures concluded that consolidation, rationalisation and capital discipline will increasingly shape the sector’s future. Success, it said, will depend less on demand growth and more on scale, balance-sheet strength and execution capability.
Story by Ali Ahmed
