Oil Marketing Association of Pakistan (OMAP) has called for Prime Minister Muhammad Shehbaz Sharif intervention to address challenged faced by the petroleum industry Industry regarding sales tax and other matters.
He added, “I urgently request your intervention to address these challenges. The delay in resolving these problems is having a severe impact on the OMC sector, with emerging companies being disproportionately affected”=
In a letter written to Prime Minister Shahbaz Sharif, Chairman OMAP Tariq Wazir Ali the persistent challenges within the petroleum sector are severely impacting the operational efficiency and growth prospects of oil marketing companies (OMCs), particularly emerging OMCs, which are the lifeblood of market competition and innovation.
appreciation for your tireless efforts to steer Pakistan towards progress and stability. Your administration’s commitment to economic reforms and infrastructural development has been a beacon of hope for many sectors, including ours.
Talking about zero rated sales tax, Tariq Wazir Ali said that the reduction of sales tax on petroleum products (MS & HSD) to 0% has resulted in a significant inability to recover the paid sales tax, leading to PKR 65 billion worth of held funds. This is critically affecting the cash flows of OMCs, with emerging companies facing existential threats due to these financial constraints.
He added that the recent reclassification of POL products, including MS, High-Speed Diesel Oil, Kerosene, and Light Diesel Oil, as exempt goods have far-reaching implications for the operational expenses of OMCs. With the sales tax on freight and capital goods now unclaimable, the sector faces increased costs that strain the already limited working capital, further hampering the financial viability of OMCs, especially smaller and emerging ones.
On his sight about delay in sales tax refund, Chairman OMAP expressed that the issue of sales tax refunds poses a persistent existential threat to emerging Oil Marketing Companies (OMCs). We request that all the pending cases of sales tax refund should be dealt on war footing basis bringing some relief to struggling OMCs, he said adding that the bureaucratic delays in processing refunds exacerbate the problem, hindering operational efficiency and growth.
Tariq Wazir further wrote in the letter, “As highlighted in our various written requests and meetings with relevant authorities, the decision on proposed margin revision is still pending which is very critical for OMCs to effectively manage rising operational costs and ensure the sustainability of our services.
He added that it is worth to note that the importation of motor fuel cargos has resulted in substantial outstanding amounts owed to OMCs, reaching exorbitant figures to billions of rupees. While formulating a revised mechanism for the recovery of FX losses it is equally important to form an action on the recovery mechanism for previously borne FX losses.
