Oil Marketing Companies seek raise in profit/margin rates

ISLAMABAD (March 29 2003) : Oil Marketing Companies (OMCs) have demanded of the government to raise their profit/margin rates on petroleum products from 3.5 percent to 4.5 percent to make Pakistan an attractive place for them to invest more.

The representatives of the oil marketing companies argue that better return could encourage more groups to come into Pakistan to invest in various petroleum-sector-related projects.

PSO Chairman Mohammed Salim said increase in profit/margin rates was a long outstanding demand of the OMCs.

He believed that upward revision would ensure OMCs better return on their capital investment and subsequently enable them to improve their services, besides improving infrastructure.

Shell Pakistan's Major Munir (Retd) noted that profit margin rates in Pakistan were the lowest in the region and it was high time for their upward revision.

He said representatives of the Oil Marketing Companies take up the issue with the authorities and make them feel that the raise, to what he called a reasonable level, indispensable.

Munir said that the government wanted from the OMCs better infrastructure and modern transport fleet, besides lay down new pipelines to meet oil demand in various parts of the country, but added that this would be impossible unless profit/margin rates were not rationalised.

The government has been demanding of these companies to enhance their storage capacity to meet any crisis-like situation.

Pakistan is faced with a difficult situation as a result of very limited strategic oil reserves capacity and the ongoing Middle East crisis was increasing the need of building up oil storage manifold.

At present, Pakistan has maximum 28 days oil storage capacity and a proposal to increase it to 58 days was under consideration.

The proposal has already been circulated to the Oil Marketing Companies for their views/suggestions.

Munir believed that such a major development would be impossible unless oil companies profit/margin rates were not revised upward.

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