The federal government's plan to revise margins of Oil Marketing Companies (OMCs) and petroleum dealers hit snags, as the agency which has been awarded the study to review margins is not being provided the relevant data, well-informed sources in Petroleum Ministry told Business Recorder.
A high-level meeting presided over by Finance Minister Ishaq Dar on July 30, 2013 had directed the Ministry of Petroleum and Natural Resources to conduct requisite study to establish basis for revision of margins of OMCs and dealers within 45 days in consultation with relevant stakeholders.
In pursuance of the decision, four reputed institutions/firms viz M/s ENAR Petroleum Services, Energy Enterprises Associates (EEA), Pakistan Institute of Development Economics (PIDE) and Lahore University of Management Sciences (LUMS) were shortlisted for conducting the requisite study within two weeks as per Terms of References (TORs) which are as follows:
(i) Review the prevailing cost, income from all sources and margin structure of OMCs/pump dealers. The review shall be conducted keeping the taxes, operating costs, financing costs and capital expenditures involved in the business along with annual turnover; (ii) the study should indicate the international practice/criteria for fixation of margins including comparison with regional countries - India, Bangladesh and Sri Lanka; (iii) the consultant will collect data for the study from OCAC, individual OMCs, PPDA, Ogra and MNPR or any other agency, if needed; (iv) component-wise analysis of pump dealers' cost such as investment made for setting up a petrol pump, rent of the site if any, salaries, electricity/fuel cost, stock losses, overheads return on assets, taxes, etc, the analysis should cover cost of doing business of the pump dealers both for urban and rural localities and turnover; (v) recommendations for fixation of OMCs/pump dealers' margins on petroleum products, ie, motor spirit (petrol), High Speed Diesel (HSD) and HOBC. The study for the OMCs margins should also cover kerosene oil and light diesel oil and; (vi) the study must be completed and submitted to MNPR within two weeks after issuance of award letter.
The purpose of the study was to prepare a report along with analysis that could be submitted to the ECC within the time schedule. According to sources, only PIDE and EEA responded to carry out the study with the request to extend the time allowed for its completion. M/s PIDE being the lowest bidder was awarded the job with the direction to complete the study as per time limit mentioned in the ToRs.
The sources said, PIDE has initiated the study and after initial meetings with MNPR, OCAC and PPDA they have demanded extension of four weeks in the time for submission of the report due to importance and quantum of work involved. Secretary Petroleum, sources said has sought 10 weeks' extension in the deadline from September 16, 2013. PIDE, however, has informed the government that the study depends on the data which is yet to be provided by OMCs.
"After initial meetings with OMCs and PPDA's representatives in Karachi, it emerged that the data collection would take considerable time. Since the analysis would be largely based on the data collected from stakeholders, the study cannot be completed without in-depth and comprehensive data. In this respect, PIDE is dependent on OMCs and petroleum dealers," said Acting Vice Chancellor, PIDE, Dr Musliaud Din.
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