OCAC urges govt to notify pending OMC margin hike

In practice, the margin was last adjusted in September 2023 and has remained at Rs7.87 per litre through fiscal years 2023-24, 2024-25 and 2025-26, the council remarked in a letter to Energy Minister Ali Pervaiz Malik.

Key points

• The council remarked oil marketing businesses face mounting financial pressures, with approximately Rs66.7 billion in Cost Differential Claims outstanding and unresolved GST and input-tax reimbursements.
• "Making completion of a multi-year, capital-intensive program a precondition for an already ECC-approved increase is unreasonable, " the council remarked.
• It has requested an urgent session with senior administration authorities to discuss the matter.

Notably, the Economic Coordination Committee has already approved the growth based on annual national consumer rate index data for fiscal years 2023-24 and 2024-25, but the adjustment has not been formally notified, according to the council.

Meanwhile, the council remarked oil marketing businesses face mounting financial pressures, with approximately Rs66.7 billion in Cost Differential Claims outstanding and unresolved GST and input-tax reimbursements. Firms have continued to supply fuel without interruption and maintained higher stock-cover requirements while operating on a regulated gross margin of only 2%, it stated.

Meanwhile, the industry group rejected the government's proposal to link the approved growth to completion of a multi-year digitisation program, saying the industry has submitted a three-year implementation plan and remains committed to the government's digitization agenda.

For context, the margin hike is projected to improve the sector's financial sustainability and provide immediate liquidity relief, helping to reduce reliance on short-term borrowing, particularly for Pakistan State Oil.

Notably, the council additionally called on determination of overdue margins for fiscal years 2025-26 and 2026-27 with a mechanism for timely annual revision, and establishment of a sustainable long-term regulatory framework.

Taken together, the developments around OCAC urges govt to notify pending OMC margin hike point to a situation that is still moving, and the coming days should bring more clarity.