Govt to revise OMCs margins formula

Aftab Ahmed

Islamabad: The government has decided to revise the formula of calculating margins of Oil Marketing Companies (OMCs) based on their audited financial statements.

The margins of OMCs are currently linked with the CPI index.

Sources told Newztodays.com that the Pakistan Institue of Development Economics (PIDE) is currently conducting a study to revise the margins of OMCs and petroleum dealers.

During the last study conducted by PIDE, data was sourced from 100 petrol pumps on the basis of questioners. However, to further improve the objectivity, PIDE had proposed that all fundamental OMCs could be involved while cost data analysis, in this case, shall be based on their financial statements, and in the case of dealers, complete random sampling may be considered.

Nadeem Babar Special Assistant to Prime Minister on Petroleum had advised focusing on parameters of study at the micro-level rather than discussing methodological and technicalities upfront that only audited financial statements of OMCs will be considered as the primary source of data.

Dealers’ study would be hinged on their sales volumes during the last three years and this data will be solicited from respective OMCs.Currently, there are around 9000 pumps in operation countrywide. In this regard, PIDE will come up with a standard deviation of the sales volume of all the filling station pumps for the last three years. Only those lying within the standard deviation should be considered. Similarly, illegal pumps will also not be considered.PIDE may further provide calculations for the pumps based on their locations.

The committee formed by ECC held its meeting on June 29, 2020, under the chairmanship of Special Assistant to Prime Minister on Petroleum Nadeem Babar to revisit the exiting mechanism for the determination of the margins of oil marketing companies and dealers and devise a revised mechanism for the purpose ensuring interests of all stakeholders particularly the consumers.

During the meeting, Nadeem Babar said that in light of the decision made in the last meeting held on April 23, wherein Planning Commission was asked to formally take up the matter with PIDE to update their previous study along with lines of TORs for devising a formula in order to revise the margins in future utilizing cost accounts expertise.

Chief Energy informed that PIDE was asked to come to this meeting and share if external support is desired because it was revealed that PIDE was not clear about TORs during the preliminary discussion he had with them earlier.

At present, margins are linked with the CPI index.