ISLAMABAD: The Oil Companies Advisory Council (OCAC) on Saturday asked the petroleum division to revise the margin of Oil Marketing Companies (OMCs) for petrol and high-speed diesel (HSD) to Rs 8.85 per litre with the start of August 2022.
Expressed grave concern regarding approval of standalone revision in Dealer’s margin by Rs 7 per liter in petrol and HSD, the OCAC, in a letter dated 30th July 2022 to the Secretary, Petroleum Division, recommended that OMCs margin be revised to Rs 8.85/liter for both petrol and HSD effective August 1, 2022.
OCAC said that the margin of dealers and OMCs have been revised collectively in the past, not just for the sake of uniformity but because it is understood and appreciated that the cost of doing business for OMCs and Dealers are aligned and increase in cost is applicable for both OMCs and Dealers. OCAC said OMCs are exposed to additional significant costs from which the Dealers are protected. Therefore, increasing Dealers margins on standalone basis is prejudicial and will set an undesirable precedence, this action will further add to the already prevalent imbalance in favor of the Dealers, said OCAC.
The OCAC added that OMCs margin is insufficient to cover the cost that has not yet been included in pricing. Based on current global and local scenarios we recommend that OMC margin be revised to Rs 8.85/litre for both PMG (Premier Motor Gasoline) and HSD effective August 1, 2022,” said OCAC letter to Petroleum Secretary dated 30th July 2022.
On behalf of member companies (OMCs), the OCAC also said that this proposed revision of Rs 8.85/liter) in OMC margin is based on number of top five OMCs namely Pakistan State Oil (PSO), Shell Pakistan Limited (SPL), Total PARCO Pakistan Limited (TPPL), Attock Petroleum Limited (APL), and Gas & Oil Pakistan Ltd. (GO) having a market share of around 90 percent.
“Immediate action is required to ensure survival of OMCs,” OCAC said.
Sharing details of cost that are covered through margin, OCAC further said that financing cost of maintaining 20 days stock cover and Pipeline Deadstock eats up around 70percent of the current OMCs margin. Similarly, at today’s price the Turnover Tax of 0.5pc consumes around 30% of the OMCs margin thereby significantly diminishing OMCs profitability. Likewise, delay in berthing of vessels due to port congestion has resulted in demurrages which is also burdening the OMCs margin, Moreover, approximately 65% of all motor fuel are imported, Letter of Credit (LC) confirmation charges have increased significantly and have severely impacted OMCs profitability, said OCAC.
According to sources, the federal cabinet on Saturday petroleum dealers’ margin by Rs7 per litre on petrol and diesel through circulation. They said that the increase in dealers’ margin will be effective from August 1. They said the federal cabinet has approved an increase in dealer margin on diesel by Rs2.87 and as a result, the dealer’s margin on diesel has been increased from Rs 4.13/litre to Rs 7/liter. The cabinet has also approved Rs 2.10 per litre hike in dealer’s margin and as a result, the dealer margin on petrol has been increased from Rs 4.90/litre to Rs 7/litre, said sources.
They added that the government has further burdened the inflation-hit masses with a hike in the Dealers margin as it would ultimately cause an increase in the prices of petroleum products with the start of August 2022. Earlier, petroleum dealers had called a nationwide strike on July 18.
