The Oil Companies Advisory Council has appealed to the government to implement the Ministry of Energy’s decision on the revision of the margins of Oil Marketing Companies (OMCs), pending since 2nd August 2022, on a priority basis.
The Advisory Council stated that OMCs play a crucial role in bridging the fuel supply deficit of the country via oil imports. However, the companies are on verge of financial breakdown due to several reasons that include:
- The increasing cost of imports in a volatile market
- Steep devaluation of the Rupee, high premiums, and interbank rates
- Delay in the recovery of exchange losses
- Limited credit facilities and as well as rising letter of credit (LC) conformation costs
- Soaring inflation and financing costs
- A minimum turnover tax of 0.5 percent
In August, the Ministry of Energy accepted OMCs’ demand for raising their margins after negotiations with stakeholders and decided to present to Economic Coordination Committee (ECC) for formal approval.
The Council highlighted that the OMC’s margin in Pakistan is the lowest in the region, comprising only 1.5 percent of retail fuel pricing.
Therefore, it asked the government to increase the overdue margin and grant immediate relief to ensure an uninterrupted fuel supply across the country.
