ISLAMABAD: The government may increase the margins of the Oil Marketing Companies (OMCs) and dealers on high-speed diesel (HSD) and petrol amid increasing trend in oil price globally.

Sources said that the Petroleum Division proposed an increase in the margin of the OMCs on HSD and petrol by 45 paisa or 16 percent per litre.

The division further proposed 58 paisa per litre increase in dealers' margin on petrol and 50 paisa per litre on the HSD.

Sources maintained that the summary would be tabled before the Economic Coordination Committee (ECC) for approval. These margins are based on an annual average of the consumer price index (general). At present, the dealer's margin on the HSD stands at Rs 3.12 per litre and Rs 3.70 per litre on petrol.

The distribution margin on the HSD and petrol stands at Rs 2.81 per litre. The 16 percent increase has been worked out on the basis of consumer price index between June 2019 and October 2020, the sources said.

In 2019, the ECC had approved an increase in margins of the OMCs and dealers.

Under the mechanism, the government is to hike margins of the OMCs and dealers after every year in line with the fluctuation of consumer price index.

Last year, the ECC had approved Rs 0.25 per liter increase for the OMCs' margin on high-speed diesel and petrol.

It approved a hike in dealers' margins of Rs 0.34 per litre on petrol and Rs 0.29 per liter on petrol. In the first week of November, the ECC had directed the stakeholders to have a new look at the formula through an independent study.

A study on margins was already carried out by the Pakistan Institute of Development Economics (PIDE) in 2014.

Again, the government asked the PIDE to update its previous study in the light of terms of reference for devising a formula.

The Petroleum Division proposed that the funding be met through the Training Fund maintained by the Petroleum Division under the Petroleum Policy, 2012.

Copyright Business Recorder, 2020