Oil Companies Advisory Council (OCAC) has demanded an increase in fuel prices to meet the demand during the agriculture sowing season starting from the second week of March, as it is facing a cash flow deficit of Rs. 35 billion.
OCAC has written a letter to the Minister of State (Petroleum Division) Musadik Malik with regard to the restrictive pricing of motor fuels.
OCAC highlighted that prices of motor fuels have been restricted, yet again, for the second fortnight of February 2023 by the government by not following the approved pricing formula.
OCAC stated that the exchange loss adjustment was Rs. 22.72 & Rs. 74.91 per liter on petrol (MS) and high-speed diesel (HSD) respectively. Similarly, FBR also reduced Customs Duty by Rs. 4.24 and Rs. 3.64 per liter on MS and HSD respectively and the revised margin of Rs. 6 per liter has not been fully incorporated in USD price till date (Rs .1 per liter outstanding).
OCAC mentioned that the companies will face Rs. 35 billion impact on the account of Customs Duty, and the impact of margin on MS as well as HSD.
OCAC in its letter claimed that this continued control of oil prices since the past year is not sustainable and will severely impact the already crippled oil industry.
The industry is facing a severe financial crunch due to high global prices, depreciation of the rupee, increased letters of credit (LCs) Confirmation charges, challenges in LC establishment and retirement, high markup rates, and high premiums on imports and will not be able to survive if these unfair adjustments are not removed immediately.
In order to ensure the survival of the industry and any supply chain challenges, it has requested immediate revision of prices based on the approved pricing formula to develop a mechanism for recovery of exchange losses.
It is pertinent to mention that the agriculture sowing season is expected to start in the second week of March and the industry claims that it will not be able to meet the increased demand placed on the industry if the current restrictive pricing is continued.