Oil Marketing Companies Seek Margin Increase After 3-Year Freeze

Pakistan’s oil marketing firms are urging the government to raise the regulated margins they are mandated to charge, citing mounting financial strain due to escalating costs, increased regulatory demands and mounting accounts receivable. The Oil Companies Advisory Council (OCAC) reported that the margin has remained static since its last revision in September 2023, persisting across fiscal years 2023-2024, 2024-2025, and 2025-2026.

The forthcoming fiscal year has likewise commenced without any adjustment. The council highlighted that oil marketers are now functioning with only a 2 percent gross margin, while grappling with heightened stock requirements, added compliance expenses and greater commitments to ensure consistent fuel distribution. The industry body emphasized that companies have assumed significant commercial risks since March 2026, influenced by geopolitical instability.

They further noted that OMCs have persisted in backing government measures, including the recently implemented daily petroleum pricing system, despite the financial strain. The Economic Coordination Committee (ECC) has already sanctioned a Rs. 1.22 per liter boost in the OMC margin, based on annual national consumer price inflation for fiscal years 2023-2024 and 2024-2025.

Nonetheless, the adjustment awaits formal notification. The present margin of Rs. 7.87 per liter, according to the council, no longer accurately mirrors the industry’s operational expenses. The OCAC also expressed concerns over liquidity, stating that approximately Rs. 66.7 billion in price disparity claims remain unresolved, alongside unresolved matters related to sales tax and input tax reimbursements.

They cautioned that funds locked in receivables are exacerbating the financial situation of oil marketing companies. The council opposed tying the approved margin increase to the completion of the sector’s digitization program. They stated that OMCs have already submitted a three-year implementation plan and remain dedicated to the government’s digitization objectives, but argued that the capital-intensive program should not delay the long-overdue margin revision.

The industry body warned that sustained financial pressure and regulatory uncertainty could undermine investment in Pakistan’s downstream petroleum sector, making the market less appealing to both local and foreign investors. The OCAC has requested the government to promptly announce the Rs. 1.22 per liter increase, determine overdue margins for fiscal years 2025-2026 and 2026-2027, and establish a mechanism for periodic and timely margin adjustments.

They emphasized the need for a commercially viable regulatory framework to enable OMCs to continue investing in fuel infrastructure and preserving the nation’s energy security.