OMCs, dealers: Increase oil margins, consultant recommends

Petroleum ministry to take matter to ECC for a final approval.

ISLAMABAD:

Margins of oil marketing companies (OMCs) and dealers on sale of petroleum products are expected to be increased, making the commodity more expensive for consumers as a consultant hired to undertake a study has proposed an increase in margins in the wake of inflationary impact.

The Pakistan Institute of Development Economics (PIDE) has proposed an increase of Rs0.80 per litre in margins of OMCs and dealers. However, it has not yet been finalised and further consultation with the Ministry of Petroleum and Natural Resources is under way, sources say.



As an interim relief before completion of the study, the previous government raised the margin on petrol by Rs0.25 per litre for OMCs and Rs0.41 per litre for dealers from April this year. On high speed diesel, the margin went up by Rs0.10 for both OMCs and dealers.

The relief was given on an initiative of former adviser to the prime minister on petroleum and natural resources Dr Asim Hussain.

At present, OMCs earn a margin of Rs2.37 per litre on petrol, Rs1.86 on diesel and Rs1.58 on kerosene oil. Dealers get Rs2.78 per litre of petrol and Rs2.30 on diesel.

Now that the consultant has recommended an upward revision in the margins, the petroleum ministry will send a summary to the Economic Coordination Committee (ECC) of the cabinet for final approval after consulting all stakeholders.



In a meeting held on November 6, the ECC was reminded that the committee, during deliberations on July 18, had decided that the study to establish the basis for revision of margins of OMCs and dealers should be carried out by the Ministry of Petroleum and Natural Resources within 45 days in consultation with relevant stakeholders.

As a result, willingness of four reputed institutions or firms was sought for conducting the study. However, only PIDE and Energy Enterprises Associates responded affirmatively with the request that the time set for completion of the study should be extended.

Later, PIDE, being the lowest bidder, was awarded the task with a directive that it should be completed within the timeframe mentioned in the terms of reference.

Though PIDE began the study, after initial meetings with the petroleum ministry, Oil Companies Advisory Committee (OCAC) and Pakistan Petroleum Dealers Association (PPDA), it pressed for an extension of four weeks in the deadline set for submission of the study report, citing the importance and quantum of work.

Agreeing that because of the nature of information required, PIDE needed more time, it was proposed that another 10 weeks, from September 16, should be given for completion of the study and examination of the report by the petroleum ministry in consultation with Ogra, Planning Commission, Development/Finance Division and other stakeholders.

Published in The Express Tribune, December 14^th, 2013.

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