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ISLAMABAD: Ministry of Energy (Petroleum Division) has proposed an increase of 6.8 percent in margins of Oil Marketing Companies (OMCs) and dealers on petroleum products on the basis of core inflation, official sources told Business Recorder.

The Economic Coordination Committee (ECC) of the Cabinet, in its decision of January 28, 2021 submitted by the Petroleum Division titled “Review of the Oil Marketing Companies and Dealers Margins on petroleum Products”, constituted a committee comprising Special Assistant to the Prime Minister on Revenue (Convener), Special Assistant to the Prime Minister on Power, Special Assistant to the Prime Minister on Petroleum and Secretary, Petroleum Division to review OMCs and dealers margins on petroleum products in a holistic manner and submit recommendations to the ECC for consideration.

In light of the ECC decision, a meeting of the Committee was held on February 4, 2021 during which SAPM on Petroleum Division gave a presentation to the members and discussed history of the margin in detail; subsequently different options were discussed in the meeting. The committee was informed that the last revision was approved by the ECC on November 6, 2019 effective from December 1, 2019.

The Committee proposed that interim relief may be given to the OMCs and dealers till the Pakistan Institute of Development Economics (PIDE) study is completed which is expected to be concluded in June 2021.

After detailed deliberations, the Committee finally recommended, the following: (i) OMCs and dealers margins may be revised on the basis of latest available average core inflation (NFNE-urban) of CPI (base 2015-16) as published by the Pakistan Bureau of Statistics for the period Oct, 2019 to Sep 2020 (12 months) i.e., 6.8 percent. The existing margin of OMCs on motor spirit and HSD will be increased by Paisa 19 per litre from Rs 2.81 to Rs 3 per litre whereas dealers’ margin will increase by Paisa 25 in MS from Rs 3.70 to Rs 3.95 per litre and HSD by Paisa 21 per litre from Rs 3.12 to Rs 3.33 per litre.

These margins will be applicable immediately until the PIDE study is finalized. Applicability of the margin for the period already lapsed, i.e. July I, 2020 to current date shall be treated as prior period adjustment by OGRA. After the PIDE study, margin will be revised again on the basis of the study and new margins will be applicable with effect from July 1, 2021. The Committee also decided that the PIDE study fee of Rs 2.5 million may be paid by the Finance Division.

Copyright Business Recorder, 2021

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