Ogra proposes increase in margins for OMCs and petroleum dealers

KARACHI: The Oil & Gas Regulatory Authority (Ogra) has recommended an upward revision in the margins for oil marketing companies (OMCs) and petroleum dealers.

In a letter to the Secretary of Petroleum, the regulator proposed increasing the margin on high-speed diesel (HSD) and petrol to Rs9.88 per litre from the current Rs7.87 per litre, representing an increase of Rs1.35 per litre for OMCs.For petroleum dealers, Ogra suggested a Rs1.40 per litre increase in margins for both HSD and petrol, raising the margin to Rs10.01 per litre from the existing Rs8.64 per litre.

Ogra said that the proposed margin adjustment includes an additional Rs0.5 per litre for OMCs and Rs0.25 per litre for dealers. This increase is intended to cover costs associated with the digitalization and automation of fuel pumps over the next three years, based on data provided by Pakistan State Oil (PSO).

The Federal Board of Revenue (FBR), Ogra, the Petroleum Division, and the oil industry are working together to implement the digitalization project. The oil sector, including OMCs and petroleum dealers, has been pushing for higher margins to offset rising financial costs.

“The industry is currently constrained by challenges such as fuel smuggling, high financing costs, the exemption from sales tax, high turnover tax, insufficient margins, and several other unresolved issues that have been repeatedly communicated to the authorities,” said the Oil Companies Advisory Council (OCAC) in a letter to Ogra’s chairperson last week.

The OCAC emphasized that the revision of OMC margins is overdue, with the last adjustment made in September 2023. The Economic Coordination Committee had previously decided that future margin adjustments would be determined by Ogra.