Oil marketing companies margin on petrol slashed
Government and oil marketing companies (OMCs) take the hit instead of consumers.
KARACHI:
The government has slashed the petrol margin of oil marketing companies (OMCs) and the petroleum levy to offset the impact of a hike in international oil prices, it was learnt on Wednesday.
Consumers have been given some relief this time around as the government and oil marketing companies have taken the hit for oil price correction, said Topline Securities analyst Farhan Mahmood.
Prices of petroleum products were kept unchanged despite the hike in global oil prices, according to a notification issued by the Oil and Gas Regulatory Authority (Ogra) on Tuesday.
The margin of OMCs on petrol has been cut to three per cent from four per cent. In absolute terms, margin on petrol is now Rs1.5 per litre from the previous Rs1.92.
Moreover, the government reduced its petroleum levy to Rs6.29 per litre from Rs8. The government generates revenue from oil products in two forms - sales tax and petroleum levy, informed Mahmood and it sacrificed its part in order to keep consumer prices unchanged.
However, margin on diesel remained the same at Rs1.35 per litre.
It is still not clear whether this is a one-time decision or permanent, said Mahmood.
Assuming these margins remain the same for the next 12 months, Pakistan State Oil’s earnings will decline by around Rs1 per share, he added.
This step will provide relief to consumers but it will dampen refining sector earnings, said Invest Cap analyst Nauman Khan.
The step is expected to reduce Attock Refinery and National Refinery earnings by Rs2.63 per share and Rs3.3 per share to Rs24.6 and Rs42.48, respectively, added Khan.
Published in The Express Tribune, December 2nd, 2010.
The government has slashed the petrol margin of oil marketing companies (OMCs) and the petroleum levy to offset the impact of a hike in international oil prices, it was learnt on Wednesday.
Consumers have been given some relief this time around as the government and oil marketing companies have taken the hit for oil price correction, said Topline Securities analyst Farhan Mahmood.
Prices of petroleum products were kept unchanged despite the hike in global oil prices, according to a notification issued by the Oil and Gas Regulatory Authority (Ogra) on Tuesday.
The margin of OMCs on petrol has been cut to three per cent from four per cent. In absolute terms, margin on petrol is now Rs1.5 per litre from the previous Rs1.92.
Moreover, the government reduced its petroleum levy to Rs6.29 per litre from Rs8. The government generates revenue from oil products in two forms - sales tax and petroleum levy, informed Mahmood and it sacrificed its part in order to keep consumer prices unchanged.
However, margin on diesel remained the same at Rs1.35 per litre.
It is still not clear whether this is a one-time decision or permanent, said Mahmood.
Assuming these margins remain the same for the next 12 months, Pakistan State Oil’s earnings will decline by around Rs1 per share, he added.
This step will provide relief to consumers but it will dampen refining sector earnings, said Invest Cap analyst Nauman Khan.
The step is expected to reduce Attock Refinery and National Refinery earnings by Rs2.63 per share and Rs3.3 per share to Rs24.6 and Rs42.48, respectively, added Khan.
Published in The Express Tribune, December 2nd, 2010.