Oil industry demands 100% hike in margins

The oil industry has called on the government to increase their margins by over 100%, citing the impact of maintaining inventory, soaring inflation and bank borrowing. Sources told The Express Tribune that the oil industry had sought the increase in margins on sales of petroleum products from the existing Rs6 per litre to Rs13.10 per litre. Of the total, the industry asked for providing margins of Rs3.20 per litre on maintaining petroleum stocks for 20 days. In order to keep inventory, oil companies have to borrow from banks at 22-23%, which amounts to Rs3.20 per litre. Sources pointed out that the government had agreed to raise the margins in July this year, but the commitment could not be met. Earlier, the margins of dealers were hiked to Rs7 per litre but for oil marketing companies, the margins were raised to only Rs6 per litre. According to sources, the industry is also encountering trouble because of exchange rate-related losses caused by frequent changes in the rupee-dollar exchange rate. It has called for immediately resolving the issue. Pakistan State Oil regularly imports petroleum products into the country but it has been facing losses for the past many months due to exchange rate uncertainty. Such issues were taken up during a meeting held with Oil and Gas Regulatory Authority (Ogra) officials and director general oil. Ogra and DG oil asked about the proposed hike in margins and sought figures and other details. According to a statement issued by the regulator, Ogra and the Ministry of Energy (Petroleum Division) jointly hosted a meeting with the oil industry to deliberate on the scores of challenges highlighted by the industry. Oil industry representatives outlined their concerns and submitted proposals for tackling the challenging business environment. The smuggling of petroleum products from Iran was also highlighted. The meeting was briefed that the matter had already been taken up with local governments through the provincial chief secretaries and the Federal Board of Revenue (FBR) for necessary action. Ogra asked the industry to provide proposals in writing with complete supporting data and assured the industry that it would consider the suggestions and take up the issues with the federal government as well. The regulator told meeting participants that its rules and regulations were consistent with no discrimination against any company or group of companies across the industry including oil, lubricants, natural gas, liquefied petroleum gas, liquefied natural gas and compressed natural gas. Published in The Express Tribune, July 13th, 2023. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

source https://tribune.com.pk/story/2425957/oil-industry-demands-100-hike-in-margins