Pakistan fuel margins set for major hike

December 11, 2025 (MLN): The Pakistani government is moving forward with plans to revise profit margins for Oil Marketing Companies (OMCs) and petroleum dealers on Motor Spirit (MS) and High-Speed Diesel (HSD).

This development came as part of a proposal in an official summary prepared for the Economic Coordination Committee (ECC).

The Ministry of Energy's Petroleum Division has submitted a comprehensive proposal to revise the existing margin structure for petroleum products.

This initiative follows a previous ECC decision from September 2023, which mandated that future margins be determined by the Oil and Gas Regulatory Authority (OGRA) through a systematic mechanism considering the operating costs of both Pakistan State Oil (PSO) and dealers.

The margin revision has become a contentious issue among industry stakeholders. The Oil Companies Advisory Council (OCAC) has been requesting an enhancement of Rs. 7.87 per liter, equivalent to Rs. 10 per liter in total.

Meanwhile, the Oil Marketing Association of Pakistan (OMAP) has sought a more substantial increase of Rs. 8.13 per liter, or Rs. 16 per liter combined for OMCs and dealers.

Following deliberations in a high-level meeting co-chaired by the Minister for Petroleum and Minister for Finance on July 16, 2025, and subsequent discussions on September 17, 2025, OGRA has developed two options based on the Consumer Price Index (CPI).

Under Option I, described as a conservative approach, margins would be revised based on annual National CPI data from 2023-24 and 2024-25 with a ceiling of 10% and a floor of 5%.

This option would result in an increase of Rs. 1.22 per liter for OMCs and Rs. 1.34 per liter for dealers.

Meanwhile, Option II presents a moderate approach with the same CPI basis but a higher ceiling of 15% while maintaining the 5% floor. This second option would lead to a more substantial increase of Rs. 1.63 per liter for OMCs and Rs. 1.79 per liter for dealers.

Earlier in the fiscal year 2024-25, OGRA had proposed enhancing OMC margins by Rs. 1.35 per liter and dealer margins by Rs. 1.40 per liter, calculated using data provided by PSO.

However, the Petroleum Division submitted a revised summary in May 2025 recommending lower increases of Rs. 1.13 per liter for OMCs and Rs. 1.12 per liter for dealers.

The Finance Division was subsequently directed to review the matter in consultation with the Petroleum Division and OGRA to develop a consensus proposal.

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