Islamabad – April 2025: The Oil Companies Advisory Council (OCAC) has officially requested the Oil and Gas Regulatory Authority (OGRA) to raise the oil marketing companies’ (OMCs) margin from Rs. 7.87 to Rs. 10 per litre—a significant 27 percent hike—to align with escalating operational costs and financial challenges facing the industry.
In its formal letter addressed to OGRA Chairman, the OCAC highlighted the urgency of revising the OMC margin, last updated in September 2023. It pointed to a staggering Rs. 73.48 billion in unadjusted sales tax accumulated between April 2022 and June 2024. The ongoing exemption of sales tax on petroleum products is further compounding the sector’s financial burden, expected to spike operational costs by Rs. 33 billion in the fiscal year 2024–25.
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To reflect the current cost structure, OCAC proposes an increase in the base margin to Rs. 8.13 per litre. This figure accounts for revised stock financing costs rising from Rs. 3.01 to Rs. 3.22 per litre, handling losses up from Rs. 0.27 to Rs. 0.82 per litre, and operating expenses climbing from Rs. 2.92 to Rs. 4.09 per litre. Furthermore, the industry body recommends a revised gross profit margin of Rs. 1.87 per litre at 23 percent.
The OCAC also calls on OGRA to initiate the recovery of various costs starting July 2024, including those tied to the sales tax exemption, unadjusted sales tax financing, and demurrage expenses. These could be compensated via the Inland Freight Equalization Margin (IFEM) for both OMCs and refineries.
If left unaddressed, these financial pressures could hinder the sector’s ability to maintain efficient operations and invest in critical infrastructure development, the OCAC warned.
