Govt increases OMCs margin by up to Rs1.32/litre from Dec 1

ISLAMABAD: Even though the government announced that it was keeping fuel prices unchanged for the next two weeks, there was a lot of movement in the components of the final price at the pump.

For starters, the government jacked up the margin of Oil Marketing Companies (OMCs) by up to Rs 1.32 per litre on the sale of petroleum products with effect from December 1, 2022.

Rs1.32 per litre might not sound like much but it represents a nearly 50% increase in the OMC margin.

With this hike the OMCs margin has reached Rs 4/litre on the sale of petrol and Rs 5/litre on the sale of diesel.

Secondly, the government also increased the petroleum levy (PL) on diesel by Rs 12/litre bringing it up to Rs 25/litre and collects Rs 50/litre PL on petrol. Earlier this year, the government had committed to increasing petroleum levy to ensure it meets revenue targets set under the IMF bailout programme.

Increasing the OMC margin and levy while keeping fuel prices the same is made possible because the falling price of oil in the global market is not being passed on to the consumer.

According to sources, the government may further increase the margin on petrol by Rs 2/litre and on diesel by Rs 1/litre.

The government believes that OMCs will earn billions of rupees worth of profit with this hike in the sales margin of petrol and diesel.

On Wednesday, Finance Minister Ishaq Dar announced a reduction in kerosene oil price by Rs 10/litre and light diesel oil (LDO) by Rs 7.50/litre, whereas petrol and diesel price will remain the same till the next fortnight. This means that after December 1, 2022 petrol will be available at the previous rate of Rs 224.80/litre, HSD at Rs 235.30/litre, Kerosene Oil at Rs 181.83/litre and LDO at Rs 179/litre in the open market for the next 15 days.

Consequently, the breakup of petroleum prices from December 1, 2022 is as follows: Ex-refinery price at Rs 142.34/litre, custom duty at Rs 14.77/litre, Inland Freight Margin at Rs 6.69/litre, OMCs margin at Rs 4/litre, dealer’s commission is fixed at Rs 7/litre and petroleum levy is fixed at Rs 50/litre. Similarly for diesel (HSD), the ex-refinery price is Rs 178.28/litre, custom duty Rs 18.12/litre, Inland Freight Margin Rs 1.90/litre, OMCs margin Rs 5/litre, dealer’s commission Rs 7/litre and petroleum levy is fixed at Rs 25/litre.



Ahmad Ahmadani
Ahmad Ahmadani
The author is an investigative journalist. He can be reached at [email protected]


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