ISLAMABAD: Within months after an over 25 per cent increase, the Oil Marketing Companies (OMCs) have formally demanded 100pc increase in their profit margins on the sale of petroleum products to “ensure the survival” of the industry.

“OMC’s margin for high-speed diesel (HSD) and petrol should be set at Rs12 per litre”, to maintain the feasibility and ensure the survival of OMCs, wrote the Oil Companies Advisory Committee (OCAC) to the federal government. The cartel representing more than three dozen oil companies and refineries said the Rs12 per litre margin would amount to less than 6pc of the current ex-refinery price.

Sources in the Petroleum Division said the dealers would also be raising similar demands as the two segments of the supply chain normally moved in tandem with each other. The dealers’ commission was also increased by more than 25pc last year to Rs7 per litre.

The OMCs margins were last increased to Rs6 per litre from Rs3 and Rs3.68 per litre on petrol and HSD sales in November last year as demanded by the industry and conceded by former prime minister Shahid Khaqan Abbasi and Minister of State for Petroleum Musadik Malik with the anticipation that quality of petroleum products would improve. The cent per cent acceptance of demand for an increase in dealers’ commission and OMCs margins encouraged the industry to raise the bar higher with a 100pc increase in existing rates.

In a letter to the Petroleum Division, the OCAC said the oil industry was playing a critical role by ensuring uninterrupted fuel supplies across the country as well as generating significant revenues in the form of duties, taxes and levies. It had, however, faced “severe challenges” since last year because of the increased cost of doing business.

Published in Dawn, May 3rd, 2023