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Profit Margins for Oil Companies Likely to be Increased

Over the weekend, the Oil and Gas Regulatory Authority (OGRA) has reportedly shared a summary with the Petroleum Division, which highlights the petroleum products price fluctuation trend for the next 15 days, starting from the 1st of December, 2020. Following that development, it has also been revealed that the government is likely to increase profit margins of oil marketing companies (OMCs) and dealers’ commission by 16 percent.

Reportedly, finance and planning ministries, along with the Oil and Gas Regulatory Authority (OGRA), are currently reviewing a formal proposal shared by the Petroleum Division. Once the review is complete, the Economic Coordination Committee (ECC) of the cabinet shall announce the final decision for the said plans.

An anonymous source from the Ministry of Finance reportedly informed the media that the petroleum division had proposed a 45 paisas increment in OMC’s margin on each liter of both petrol and high-speed diesel (HSD). The division has also recommended a 58 paisas per liter increase on petrol and 50 paisas on HSD.


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With that in effect, the OMCs would get Rs. 3.26 per liter profit on petrol and HSD. The dealers would earn Rs. 4.28 per liter commission on the sale of petrol and Rs. 3.62 on HSD. The 16 percent rise in the margins, according to the Petroleum Division, has been proposed based on the consumer price index (CPI) between June 2019 and October 2020.

It bears mentioning that, as reported by Dawn, in the past 7 years, including the tenure of the previous government, the profit margins for the OMCs and the dealers, in petrol, have risen by 92 paisas per liter whereas, in HSD, they have risen by 82 paisas. However, now the Petroleum Division has requested a 58 paisas and 50 paisas per liter increase in profit margin on petrol and HSD respectively, in a single go.

This could have a significant effect on the prices of petroleum products that are made available to the public. Whether the government allows this degree of advancement on the profit margins remains to be seen.

  • The govt. should first ensure that these marketing companies are not tempering with their meters and charging the customers for the amount which is filled in vehicle. Also it must be ensured that fuel sold is free of any adulteration. Recently, there has been a crack down in Islamabad and most of the fuel pumps were found to have tempered with the meters, overcharging their customers. A similar crackdown is needed all over the country.

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