Oil Sector Demands Increase in OMC Margins

ISLAMABAD: The oil sector has formally requested the government to approve a revised Rs10 per litre margin for oil marketing companies (OMCs), up from the current Rs7.87 per litre, citing increased operational and financial pressures.

The Oil Companies Advisory Council (OCAC), in a letter to the Minister for Petroleum, stated that the industry had initially proposed a margin of Rs12.65 per litre in June 2024, based on actual cost inputs. These included financing for maintaining 20-day fuel stocks, turnover tax, handling losses, demurrage, unadjusted GST until June 2024, and various operational expenses.

After consultation with the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA), the oil sector revised its demand to Rs10 per litre. It also requested that costs related to demurrage and unadjusted GST be recovered via the Inland Freight Equalisation Margin (IFEM).

The OCAC noted that while the Economic Coordination Committee (ECC) had approved GST recovery through IFEM, the request for margin revision had not yet been addressed. It urged the minister to immediately approve the Rs10 margin to avoid further financial setbacks for oil marketing companies.

Additionally, the council stressed the need for the GST exemption to be formally included in the Finance Bill 2025. It emphasized that both the margin adjustment and legislative recognition of the exemption are crucial for maintaining the downstream sector’s financial stability and ensuring a consistent fuel supply across Pakistan.