ISLAMABAD: The federal government is finalising a plan to recover approximately Rs 75 billion annually from petroleum consumers through a combination of increased margins and compensation mechanisms for oil refineries, oil marketing companies, and fuel dealers.
According to official sources, a decision has been made to raise the margins of Oil Marketing Companies (OMCs) and petroleum dealers on both petrol and diesel, while oil refineries are expected to receive a financial support package worth Rs 34 billion annually through the Inland Freight Equalization Margin (IFEM).
As per the proposed mechanism, OMC margins on petrol and diesel will be increased by Rs1.13 per litre, while an identical increase of Rs1.13 per litre is also planned for dealers. Additionally, the refineries’ sales tax-related losses—caused by the exemption on petroleum products in the Finance Act 2024–25—will be compensated via IFEM.
Collectively, these measures are expected to increase the retail prices of petrol and diesel by Rs 4.18 per litre.
The package comes in response to mounting pressure from stakeholders across the oil supply chain who have raised concerns over unsustainable operating costs and delayed reimbursements.
Sources said the final approval of the plan is expected soon after necessary consultations with the Prime Minister.
The Rs34 billion compensation package for refineries is being formulated to offset their estimated annual losses stemming from the non-recoverable input sales tax on petroleum products, which have been classified as tax-exempt for the ongoing fiscal year.
Payments to the refineries will be made by adjusting the IFEM charges, which are built into the consumer price of petroleum products, said sources.
It is also learnt from sources that the Petroleum Division has moved a summary titled as “Settlement of Financial Issues of Refineries and OMCs” for the consideration and approval of the federal cabinet’s economic coordination committee (ECC).
