Oil sector urges revision of OMC margins to address financial pressures

KARACHI: The oil sector has called for an upward revision of the oil marketing company (OMC) margin to address rising financial costs.

“The industry is currently constrained by factors such as smuggling, high financing costs, exemption from sales tax, high turnover tax, insufficient margins and several other unresolved issues that have been communicated to relevant authorities repeatedly,” stated the Oil Companies Advisory Council (OCAC) in a letter to the chairperson of the Oil and Gas Regulatory Authority (Ogra).

The oil body emphasized that the revision of the OMC margin is overdue, as the last adjustment was made in September 2023. The Economic Coordination Committee had previously approved that future changes in the margin would be determined by Ogra.

The OCAC recommended that Ogra revise the OMC margins for high-speed diesel (HSD) and Mogas to Rs12.65 per liter. This is based on the financing costs associated with maintaining a 20-day stock cover, turnover tax, handling losses, demurrage, the financing cost of unadjusted sales tax, and the operating expenses incurred by OMCs.