PML-N govt raised margins in line with CPI
ISLAMABAD: The Abbasi-led administration had increased margins of Oil Marketing Companies (OMCs) and dealers of Motor Spirit (MS) and High Speed Diesel (HSD) in line with Consumer Price Index (CPI), well-informed sources told Business Recorder.
The decision was taken at the ECC on May 30 and subsequently ratified by the federal cabinet on May 31, 2018, the last day of PML (N) government’s tenure.
The sources said the ECC on October 6, 2017 approved the margins of OMCs and dealers on Motor Spirit (MS or petrol) based on Consumer Price Index (CPI). Accordingly, the margins on MS were revised upward effective from November 1, 2017. The margins on HSD were proposed to be deregulated under the ECC decision of December 1, 2017 subject to certain conditions. However, the implementation in this regard was deferred till the formulation of GST recovery mechanism on deregulated margins by FBR.
Oil Companies Marketing Advisory Council (OCAC) in its letter of March 2, 2018 has agitated the impact of deferral in deregulation of HSD margins. Since no provision in the HSD margins (along the lines of MS) was made on CPI basis effective from November 1, 2017, the OMCs have claimed a loss of almost Rs 845 million for the period November 2017-February 2018.
Further, in order to avoid additional loss being sustained by OMCs since November, 2017 onwards, it has been suggested that till the formulation of GST recovery mechanism on the HSD margins under deregulation scenario, the margins on HSD may also be notified based on CPI in line with the approved procedure adopted for MS under the ECC decision of October 6, 2017.
According to the policy of deregulation and liberalization the government is pursing to deregulate the prices of petroleum products in a phased manner and accordingly, the prices of furnace oil, High Octane Blanding Component (HOBC), 97 RON), petrol (95 RON) and diesel) HSD Euro IV and V) have been completely deregulated so far.
The Petroleum Division further stated that the proposed OMCs and dealers’ margin on MS (main grade or petrol 92 RON) may also be deregulated in line with the deregulation of margins on HSD as approved by the ECC in its decision of October 6, 2017. However, the deregulation of margins on MS as well as on HSD shall be implemented after the GST recovery mechanism on deregulated margins is developed by Federal Board of Revenue (FBR). Further, till the formulation of GST recovery mechanism on deregulated margins by FBR, the margins on MS and HSD are to be reviewed based on CPI, effective from July 2018.
Accordingly, the revision in margins on MS/HSD for OMCs and dealers has been revised on the basis of CPI for the respective period duly published by Pakistan Bureau of Statistics which says that the revised margin of OMC for motor spirit will be Rs 2.64 per litre from Rs 2.55 per litre (Rs 0.09 per litre or 3.5 per cent) and dealers margin’ to Rs 3.47 from Rs 3.35 per litre (Rs 0.12 per litre (3.5 per cent). The margin of OMC on HSD has been increased by Rs 0.23 per litre to Rs 2.64 from Rs 2.41 per litre (9.95 per cent) whereas dealers’ margin will be Rs 2.93 per litre from Rs 2.67 per litre, showing an increase of Rs 0.26 per litre (9.97 per cent).—MUSHTAQ GHUMMAN