LAHORE: The Oil Marketing Association of Pakistan (OMAP) on Thursday issued an urgent appeal to Prime Minister Shehbaz Sharif, warning of a potential collapse of the petroleum industry if immediate action is not taken.

In a letter to the Prime Minister, OMAP Chairman Tariq Wazir highlighted several critical challenges facing the sector, including delayed margin revisions, accumulating sales tax refunds, and mounting foreign exchange losses. Wazir emphasized the industry’s crucial role in Pakistan’s economy and urged the Prime Minister to intervene to address these issues and prevent a potential industry collapse.

OMAP argues that the failure to revise OMC margins is unsustainable, given escalating operational costs. They urged the Prime Minister to direct OGRA to reconsider proposed margins to ensure the financial viability of OMCs.

The zero-rated sales tax on petroleum products has led to a massive accumulation of Rs65 billion in held funds, severely impacting cash flow, particularly for smaller players. OMAP demanded immediate resolution of sales tax refund delays.

OMCs are grappling with significant foreign exchange losses incurred due to motor fuel imports. The absence of a clear recovery mechanism and delays in reimbursement are creating severe financial strain.

Chairman Wazir stressed that the petroleum industry is vital for Pakistan’s energy security and economic stability. He urged the Prime Minister to intervene immediately to address these critical issues and prevent the industry from collapsing.

Copyright Business Recorder, 2024