OCAC Urges Govt to Increase OMC Margins By Rs. 4.78 Per Litre

The Oil Companies Advisory Council (OCAC) has pressed the Petroleum Division to increase the margins of oil marketing companies (OMCs) since OGRA’s proposed increase of Rs. 1.35 per litre is way below the recommended increase of Rs. 4.78 per litre. In a letter to the Director General (DG) Oil, OCAC called for OMC margins to be increased from Rs. 7.87 to Rs. 12.65 per litre. The council said this was necessary to tackle the rising costs of maintaining a 20-day stock cover, turnover tax, handling losses, and sales tax financing among other operational expenses. OGRA recently allocated only Rs. 0.5 per litre from the proposed increase for fuel pump digitization, which OCAC rejected. The effective margin adjustment stands at just Rs. 0.85 per litre which OCAC argued is insufficient to offset inflation. The sector faces other bothersome hurdles like petroleum product smuggling, high financing costs, and turnover taxes, all of which jeopardize OMC operations. OCAC has called for an urgent meeting with stakeholders to realign OMC margins with actual costs. It has warned of risks to the sector’s viability if concerns remain unaddressed.