OMAP protests over Sindh cess deduction without price adjustment

LAHORE: The Oil Marketing Association of Pakistan (OMAP) has strongly protested over the recent deduction of the Sindh Infrastructure Cess Tax at the rate of 1.85%, calling it an unlawful move that threatens the operational viability of Oil Marketing Companies (OMCs).

In a letter addressed to the Secretary, Ministry of Energy (Petroleum Division), OMAP Chairman Tariq Wazir Ali has expressed serious concern over the enforcement of the Sindh Government’s Infrastructure Cess Tax without incorporating it into the government’s regulated fuel pricing mechanism.

According to the OMAP, the levy adds an additional burden of around PKR 2.5 to PKR 3 per litre which directly eats into the already thin margins of OMCs. The association warned that this deduction could disrupt operations and the petroleum supply chain if not immediately addressed.

“OMCs operate in a fully regulated environment where all product prices, margins, and cost elements are determined by a prescribed formula, and they (authorities) have no legal or operational discretion to absorb any additional cost or deduction beyond the approved pricing formula,” Tariq said in the letter.

The association maintained that deducting 1.85% of the Sindh Cess from OMCs’ profit margins is neither legally tenable nor consistent with established regulatory mechanisms. It urged the ministry of energy to suspend the implementation of the deduction until the cess is properly reflected in the government-notified price structure by the Oil and Gas Regulatory Authority (OGRA).

The OMAP, in the letter, has sought the urgent intervention of the petroleum division to legally review the matter and ensure that the cess, if applicable, is first integrated within the pricing formula before being enforced on OMCs.

Copyright Business Recorder, 2025