OMCs: Upward revision in margins on cards

November 9, 2020 (MLN):  There are high chances that the government may increase margins on oil products soon, which are pending for last 5 months as per new oil price mechanism.

A report by Sherman Securities revealed that the Petroleum Division has sought a detailed briefing from Oil Marketing Companies (OMCs) and dealers today to discuss their margins on POL products.

To highlight, OMCs margins on various oil products are linked to average annual CPI inflation of preceding year, as per the prescribed formula. Last time, in December 2019, the government revised OMCs margins upward by 6% which was slightly lower than average CPI inflation of 6.8%.

Thus, with average CPI recorded at 10.7% in FY20, it is likely that OMCs margin may revise upward to Rs3.11 per liter each on diesel and petrol from existing level of Rs2.81 per liter, said the report.

As Pakistan’s annual POL sales is close to 20mn tons in which retail fuels (Diesel and Petrol being key products) contribute mainly around 80%, this development is likely to bode well for OMCs in Pakistan including listed companies like PSO, Shell, APL, HASCOL and HTL, the report added.

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