Oil companies seek review of pricing formula

Circular debt and government receivables compound problems, say representatives.

KARACHI: Oil marketing companies have urged the government to revise the recently introduced changes in the pricing formula for their products.

In a meeting held here on Monday under the auspices of the Oil Companies Advisory Committee (OCAC), representatives of the companies expressed concern over recent developments. A press release issued by the committee warned that “the change in pricing mechanism has brought margins down to unsustainably low levels.”

“The industry is already suffering financial charges on high circular debt and outstanding government receivables arising from price differential claims on petrol and diesel,” OCAC’s secretary general Pervez Yusuf told The Express Tribune.

He added that this “significant and sudden reduction” will come as a hit on profitability and will impede “much-needed future investment in the oil sector.”

Representatives of oil marketing companies reminded that the industry provides “significant contribution” to the national exchequer in the form of taxes and revenues and is also “providing livelihood to thousands of people.”

OCAC has requested an urgent meeting with the minister for petroleum and secretary petroleum to ensure immediate corrective actions.

However, the federal minister for petroleum and natural resources is currently on an official visit to Turkey with Prime Minister Yousaf Raza Gilani. “The minister will return on December 9 and only then a meeting can be scheduled,” a government official said.

Published in The Express Tribune, December 7^th, 2010.