Interim increase in OMCs’ margins allowed

Aftab Ahmed

 The government is set to increase margins of Oil Marketing Companies (OMCs) and dealers on petroleum products by 6.8 percent effective from July 1, 2020.

The Economic Coordination Committee (ECC) will give formal approval in this regard.

The ECC in its meeting held on January 18, 2021, had taken up the matter of hiking margins as diesel by Rs 0.45 per liter each on petrol and diesel for OMCs. It also considered the proposed increase of Rs 0.58 per liter on petrol and Rs 0.50 per liter on diesel. However, ECC had formed a committee to review the proposed increase holistically.

Now, the committee had completed deliberations and proposed an interim increase of 6.8 per cent effective from July 1, 2020, till the completion of the study by PIDE.

The committee had suggested a hike in the margin of petrol and diesel by Rs 0.19 per liter each for OMCs.This will lead to increased margins from the existing 2.81 to Rs 3 per liter each for OMCs.

The committee had also proposed an increase of Rs 0.25 per liter on petrol and Rs 0.21 per liter on diesel for dealers. This will lead to increasing the existing margin to Rs 3.95 and Rs 3.33 per liter respectively. The current margin on petrol is Rs 3.70 and high-speed diesel Rs 3.12 per liter.

The OCAC has approached the government and requested to increase margins on petroleum products following the hike in inflation.

The government had made the last increase in December 2019 and therefore, the revision was due from July 1, 2020. However, the government could not increase the margins due to a delay in a study by PIDE.