Petroleum products: OMCs, dealers may continue collecting high margins

Study aimed at finalising margins remains incomplete after three months.

ISLAMABAD:

As a three-month deadline comes to an end, the Economic Coordination Committee (ECC) is likely to permit oil marketing companies (OMCs) and dealers to collect increased margins on sale of petroleum products for a further four months until the margins are finalised, officials say.

The economic decision-making body in a meeting held on February 26 this year, during the tenure of previous Pakistan Peoples Party-led government, had approved the increase in OMC margins on petrol and high speed diesel by Rs0.25 (12.5%) and Rs0.10 (5.7%) per litre respectively for three months as an interim relief.

The dealer margin on petrol was increased by Rs0.41 (17.2%) per litre, but no change was made in their margin on diesel.

Following the ECC’s decision, the new margins came into effect from April 1, 2013.



ECC members also decided that a comprehensive study should be undertaken and completed within three months to establish the basis for the revised margins of OMCs and dealers. The ECC would review the study and until such time the revised margins would be treated as an interim relief.

The committee asked the Oil and Gas Regulatory Authority (Ogra) to carry out the study keeping in view its role as an independent regulator, which may help develop the criteria or policy for revision of margins on petroleum products.

Since the study could not be completed after a lapse of three months because of a host of reasons, the ECC has now been asked to give a further four months with the advice that Ogra should complete the study and prepare a report within the set timeframe.

The ECC’s approval has been sought to continue the interim relief for the OMCs and dealers under a final decision on the matter, officials say.

Following the increase in margins of OMCs and dealers, consumer prices of petrol and diesel had risen slightly.

According to sources, Ogra, during ECC’s February meeting, had resisted the upward revision in margins on petroleum products and instead suggested an audit to determine how much profits the OMCs and dealers were making.

The regulator was of the view that the OMCs and dealers were making hefty profits and described any increase in their margins as unjustified.

Published in The Express Tribune, July 26^th, 2013.

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