OMCs seek swift margin revision

Urge govt intervention, saying margins not revised for 3 years despite high costs

ISLAMABAD:

Pakistan's leading oil marketing companies (OMCs) have approached the federal government, seeking the petroleum minister's urgent intervention over continuous delay in revising their regulated margins as mounting financial pressures are threatening the commercial viability of the downstream petroleum sector.

In a letter dated August 18, 2026, the Oil Companies Advisory Council (OCAC) told Minister for Energy (Petroleum Division) Ali Pervaiz Malik that OMCs had reached a "critical juncture" after operating for three years without a commensurate revision in their margins despite rising operating, financing and regulatory costs.

The letter carries signatures on behalf of major industry players including Attock Petroleum, BE Energy, Cnergyico Pk, Gas & Oil Pakistan, Hascol Petroleum, Pakistan State Oil, Parco Gunvor, Puma Energy Pakistan and Wafi Energy Pakistan.

Industry executives urged the government to immediately notify an already approved increase of Rs1.22 per litre in OMC margins, arguing that linking the adjustment to completion of the government's digitisation programme would put an additional financial strain on the companies.

According to the OCAC, the OMC margins were last revised in September 2023. Since then, three financial years have passed and FY2026-27 has begun without a commensurate adjustment in the regulated margins. At the same time, companies have faced additional requirements, including higher stock-cover obligations and expanding regulatory compliance.

The industry pointed out that the Economic Coordination Committee (ECC) had already approved an increase of Rs1.22 per litre in the OMC margins on the basis of annual national Consumer Price Index (CPI) for FY2023-24 and FY2024-25. However, it has yet to be implemented.

The current OMC margins stand at Rs7.87 per litre, which the industry terms "grossly inadequate" in view of the erosion in business economics and the financial burden being shouldered by the companies. OMCs are operating on a regulated gross margin of only around 2%, according to the letter.

A key concern raised by the oil industry is the government's apparent linkage of the increase in margins with implementation of the OMC digitisation programme. OCAC said companies were fully committed to the digitisation objectives and had already submitted a three-year implementation plan. However, it argued that completion of a multi-year, capital-intensive programme should not be made a precondition for margin hike that had already been approved by the ECC.

The council maintained that such technological investments required a financially sustainable margin framework capable of providing companies with the resources needed to undertake the transformation.

Rs66.7b claims stuck

OMCs also highlighted a severe liquidity squeeze, saying approximately Rs66.7 billion in price differential claims (PDCs) remained outstanding, while GST and input tax reimbursements had also not been resolved. "The accumulation of these receivables has locked up substantial industry funds and is putting increasing pressure on the commercial viability of OMCs," the council said.

The companies cautioned that the deteriorating financial position could have implications beyond their immediate operations by discouraging fresh investment in Pakistan's petroleum sector. They warned that prolonged regulatory intervention and policy uncertainty could further undermine investor confidence at a time when Pakistan was seeking greater domestic and foreign investment.

The industry reminded the government that OMCs had continued to ensure uninterrupted petroleum supplies despite financial pressures. It cited the recent introduction of the daily petroleum pricing mechanism, saying companies immediately cooperated with the government and implemented the new system despite a short notice and the operational adjustments involved.

Similarly, during the geopolitical turmoil since March 2026, OMCs said they committed substantial financial resources and assumed significant commercial risks to maintain uninterrupted fuel supplies. The council stressed that the industry's continued cooperation should not be interpreted as an ability to indefinitely absorb escalating financial burdens.

It argued that regulated margins should not merely cover obligations but also provide a reasonable commercial return considering the capital deployed, risks assumed and OMCs' role in maintaining Pakistan's petroleum supply chain.

Key demands

OMCs placed three key demands before the government: immediate notification and implementation of the pending Rs1.22-per-litre margin increase; determination of overdue margins for FY2025-26 and FY2026-27, along with a mechanism for timely annual revisions in future; and establishment of a commercially sustainable, fair and equitable regulatory framework for the downstream petroleum sector.

The industry also sought an urgent meeting between the petroleum minister and senior OMC representatives to discuss the situation. OCAC cautioned that immediate government intervention was necessary to safeguard the financial sustainability of OMCs and avert what it described as potentially "irreversible damage" to the sector.