LAHORE: Chairman Oil Marketing Association of Pakistan Tariq Wazir Ali on Tuesday appealed to the Minister of Finance and Revenue Muhammad Aurangzeb, for urgent attention to address the critical challenges faced by emerging Oil Marketing Companies (OMCs).
Tariq Wazir said OMCs have made significant investments in Pakistan. They are grappling with liquidity crisis compounded by various financial obstacles, including substantial holdings in FX Adjustment Losses, Sales Tax adjustments, IFEM audit delays, smuggling of Iranian diesel, and the imposition of an unfair turnover tax.
Tariq Wazir highlights that OMCs are burdened with approximately PKR 26 billion in FX Adjustment Losses despite the acknowledgment of flaws in the mechanism by both the Energy Ministry and OGRA.
The slow rectification process is impeding operational capabilities and hindering the ability to function effectively. Furthermore, a staggering amount of PKR 65 billion is held up in Sales Tax refunds, disrupting cash flow within the sector.
This delay places an undue burden on the industry, making it increasingly difficult for OMCs to operate efficiently. The prolonged audit processes associated with IFEM have also significantly reduced receivable funds over the past eight years, with a substantial amount of PKR 15 billion remaining stuck.
Tariq Wazir pointed out that the rampant smuggling of Iranian petroleum products into Pakistan poses a significant threat to the legitimate operations of OMCs, undermining the national economy and creating an uneven playing field.
This illegal activity results in an annual loss of approximately PKR 400 billion to the national economy, translating to over PKR 1 billion per day. He emphasizes that addressing these concerns will not only ensure the sustainability and growth of emerging OMCs but also contribute to fostering a conducive business environment for the entire oil industry in Pakistan.
Copyright Business Recorder, 2024
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