ISLAMABAD: Petroleum Division has assured the oil industry that they are willing to resolve their issues including LCs and turnover tax in a meeting held here on Thursday.
Minister of State for Petroleum Dr Musadik Malik chaired a high-level meeting with all Oil Marketing Companies (OMCs) and representatives of the Oil Companies Advisory Council (OCAC). The minister has assured the industry that all their reasonable concerns regarding finances will be duly taken up with the Finance Ministry, including LCs and Turnover tax matters.
The OMCs have categorically stated that they have enough stocks of petroleum products for smooth supply in the country and have committed to maintaining the integrity of supply chain. The government has assured that it will solve the problems faced by the Oil industry and will take up the matters will all quarters concerned.
Dr Musadik Malik lauded the OMCs for timely communications and averting any foreseeable crisis in the country. He further said that we will work hand in glove with the oil industry to ensure that our stocks don’t dry out. Both sides have committed to stop illegal hoarding practices.
Sources said that representatives of the OMCs have said that the rate of 0.75 percent of turnover was excessive as the companies are bound to sell the goods on fixed margin which constitutes less than three percent of the turnover; and where margin is less than three percent of the turnover (meaning gross profit lesser than three percent of turnover) imposition of minimum tax at the rate of 0.75 percent of the turnover is exorbitant. Earlier, the OCAC had approached the State Bank of Pakistan (SBP), requesting to intervene following reluctance of banks to open Letters of Credit (LCs) for oil import in the wake of rapidly rising crude prices. Commercial banks had declared oil companies as “risk entities”.
As a result, the banks were not willing to extend financing to the industry, which was struggling to import oil amid high prices.
Copyright Business Recorder, 2022