ISLAMABAD-Oil Marketing Association of Pakistan (OMAP) has said that disparities in premiums, lack of clarity in ex-refinery prices determination, restricted credit lines and additional sales tax have created an alarming situation which is causing substantial financial losses pushing the OMCs toward a perilous tipping point.
In a letter to caretaker Minister for Energy, Muhammad Ali, the Oil Marketing Association of Pakistan (OMAP) said that the existing policy for determining ex-refinery prices lacks clarity, leading to several operational challenges for OMCs. Similarly, the OMAP said that the existing policy for determining ex-refinery prices lacks clarity, leading to several operational challenges for OMCs. We propose the implementation of a pool system to compensate OMCs for verifiable FX losses, said the letter available with The Nation. Additionally, a comprehensive audit is recommended to assess the distribution of losses from 2020 onwards, ensuring a fair and transparent process. It is suggested that the price mechanism of FX adjustments be revised to account for significant fluctuations in exchange rates. OGRA’s formal communication to OMCs detailing pending amounts will facilitate accurate representation in balance sheets, strengthening their financial position.
On additional sales tax, it said that the imposition of an extra sales tax on petroleum products has intensified the financial difficulties faced by OMCs. We urge a thorough evaluation of this policy, considering its impact on the industry. OMCs are grappling with substantial amounts stuck in various tax adjustments, and swift refunds are requested to alleviate financial strain. On price mechanism and equitable premium reimbursement, it said that the disparities in premiums between PSO and other OMCs, particularly in HSD, pose significant challenges. An analysis reveals substantial financial losses for OMCs, jeopardising industry stability. Urgent measures are needed to rectify this imbalance and ensure a fair playing field. The cumulative effect of these issues has created an alarming situation for OMCs. Financial instability, disrupted balance sheets, and restricted credit lines are pushing us toward a perilous tipping point. The transition from the green list to the gray list in banking institutions is exacerbating the challenges, necessitating an immediate increase in approved limits for LCs.
Despite numerous meetings, reminders, and appeals, the outcomes have unfortunately been unproductive, leaving the OMCs in a precarious situation. The gravity of these issues demands immediate attention, as the delay in resolution is pushing OMCs to the brink of collapse. The OMAP sought urgent attention and intervention in addressing a series of prolonged and unresolved issues that are severely impacting the viability of Oil Marketing Companies (OMCs) in the country. OMAP requested a meeting with minister to discuss these issues in detail and seek your prompt intervention for their resolution. Timely action is imperative to prevent further damage to the industry and safeguard the livelihoods of millions associated with it.