Oil Marketing Association of Pakistan (OMAP) has requested Ministry of Energy for urgent intervention on revised Oil Marketing Companies (OMCs) margins by Oil and Gas Regulatory Authority (OGRA).
In a letter writter to Secretary Petroleum Ministry of Energy Momin Agha, Chairman OMAP Tariq Wazir Ali said that OMAP found the proposed margin far below the recommended level necessary for the healthy functioning of OMCs.
He said that given the escalating cost of doing business, decreasing sale, pending sales tax refunds, FX losses adjustment and rising operational expenses, the current margin structure does not adequately support the financial viability of OMCs.
This is particularly alarming in an industry where operational and logistical challenges already create thin margins. If the margin remains at the proposed level, it would severely impact the ability of OMCs to cover even the basic operational requirements, let alone invest in critical areas such as infrastructure development, digital transformation, and safety protocols.
Tariq Wazir Ali further said that it is essential to note that OGRA, being the custodian of this sector, should advocate for a margin that truly reflects the operational realities of OMCs. If OGRA has been entrusted by the Ministry to recommend a suitable margin, we respectfully expect that this recommendation be based on a detailed and accurate depiction of the OMCs’ business landscape.
A margin that does not account for the high cost of doing business will only result in diminishing returns for the entire sector, potentially leading to the closure of smaller OMCs and limiting competition.
