Islamabad, Apr 11, 2025: The Oil Companies Advisory Council (OCAC) has officially appealed to the Oil and Gas Regulatory Authority (OGRA) to enhance the profit margin for oil marketing companies (OMCs) from the existing Rs. 7.87 to Rs. 10 per litre, marking a 27% hike.
In a formal communication addressed to the OGRA chairman, the OCAC emphasized the urgent need for a revision in OMC margins and highlighted the accumulated burden of unpaid sales tax on the sector.
OCAC states that they haven’t updated the current margin since September 2023.
The body revealed that a staggering Rs. 73.48 billion in sales tax remains unreconciled from April 2022 to June 2024.
Meanwhile, the sales tax relief on petroleum products continues to exert financial pressure on the industry.
In the upcoming fiscal year (FY25), this exemption is expected to add Rs. 33 billion to the industry’s cost structure.
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As a result, oil marketing firms are struggling to remain financially viable and face challenges in maintaining service continuity and investing in infrastructure.
The updated financial model by OCAC suggests that the existing Rs. 6.20 per litre operating margin should be raised to Rs. 8.13 per litre to reflect true costs.
This revised figure includes adjustments such as an increase in stock financing charges from Rs. 3.01 to Rs. 3.22 per litre, handling losses from Rs. 0.27 to Rs. 0.82 per litre, and operating overheads from Rs. 2.92 to Rs. 4.09 per litre.
Moreover, OCAC has recommended revising the gross margin to Rs. 1.87 per litre, bringing it in line with a 23% return benchmark.
The council has further demanded compensation for the sales tax exemptions starting July 2024, interest costs associated with unadjusted sales tax amounts from April 2022 to June 2024, and demurrage charges under the Inland Freight Equalization Margin (IFEM) mechanism for both OMCs and refineries.
