Govt unlikely to increase petroleum margins

Petroleum adviser to take final decision after returning from Russia.

ISLAMABAD:

The government is unlikely to increase profit margins by 400 per cent for dealers of petroleum products at a time when global oil prices are on the rise.

A meeting was held between the All Pakistan Petroleum Dealers Association and secretary petroleum on Wednesday to discuss the issue.

Senior officials of the petroleum ministry told the dealers that a final decision would be taken when Prime Minister’s Adviser on Petroleum and Natural Resources Dr Asim Hussain returns from Russia.

Dealers had informed the petroleum ministry officials that electricity rates had gone up causing an increase in the cost of doing business, according to sources. Dealers are currently getting margins of Rs1.5 per litre on diesel and Rs1.87 per litre on petrol. They demanded the margins should be fixed at Rs5 per litre during the meeting.

Petroleum ministry officials said that dealers were demanding a huge increase which would not be acceptable to the government. Officials said that the increase All Pakistan Petroleum Dealers Association Chairman Abdul Sami Khan told The Express Tribune that cost of doing business had increased manifold due to the hike in electricity rates and oil prices. He said that they were receiving only one per cent margin on petroleum products, which was not enough to survive.

Refineries and OMCs  also step in

Refineries and Oil Marketing Companies (OMCs) have also sought a change in the oil pricing formula and increase in margins due to inflationary pressure.

Margins of OMCs on petrol and diesel currently stand at Rs1.5 per litre and Rs1.35 per litre, respectively, while they want them to be fixed at Rs2.5 per litre.

Attock Refinery Limited Chief Executive Officer Adil Khattak said that the government had withdrawn one per cent import incidental on crude oil that should be restored. He urged the government to continue 7.5 per cent deemed duty on High Speed Diesel (HSD) to protect the refining sector.

He said that the Economic Coordination Committee (ECC) of the cabinet had approved a price equal to the import price of petrol but the decision had not been implemented. “The government should immediately implement the decision to save the industry,” he added.

Published in The Express Tribune, May 12^th, 2011.