Pakistan’s oil marketing companies (OMCs) are urgently requesting the government to increase their regulated profit margins, citing escalating operational costs, strict regulatory demands, and delayed payments that are severely straining the industry’s finances.

According to the Oil Companies Advisory Council (OCAC), the industry’s margins have remained stagnant since September 2023. OMCs are currently operating on a slim gross margin of just 2% (Rs. 7.87 per liter) while simultaneously managing higher stock requirements, extra compliance costs, and the commercial risks associated with recent geopolitical uncertainties. While the Economic Coordination Committee (ECC) has already approved a Rs. 1.22 per liter margin increase to account for inflation, the government has yet to officially implement it.

The sector is also grappling with a severe liquidity crunch. The OCAC noted that approximately Rs. 66.7 billion in price differential claims remain unpaid, alongside ongoing, unresolved issues regarding sales and input tax reimbursements. These tied-up funds are placing massive pressure on the companies’ financial stability.

Furthermore, the council strongly opposed the government’s proposal to make the approved margin increase conditional upon the rollout of a sector-wide digitization program. While OMCs have submitted a three-year plan and support the digital transition, they argue that this capital-intensive project should not stall the margin adjustment that the ECC has already cleared.

The OCAC warned that continuous financial pressure and an unpredictable regulatory environment could severely damage investment in Pakistan’s downstream petroleum sector, potentially driving away both domestic and foreign investors. To secure the country’s energy infrastructure, the council is demanding the immediate notification of the Rs. 1.22 per liter increase, the settlement of overdue margins, and the establishment of a reliable system for annual margin adjustments.