The Oil Marketing Association of Pakistan (OMAP) has strongly protested against the Sindh government’s decision to impose an infrastructure cess of 1.85 percent on petroleum products without adjusting it in the government-regulated price structure.
In letters addressed to the Secretary Petroleum and other federal and provincial authorities, OMAP termed the move “unjustified,” warning that the new levy would translate into an additional burden of Rs2.5 to Rs3 per litre. The association said this would directly erode the already narrow profit margins of oil marketing companies (OMCs) and threaten their operational viability.
According to OMAP, OMCs operate in a fully regulated environment where product prices, margins, and all cost components are determined strictly under the prescribed formula. As such, the companies have no legal or operational discretion to absorb any extra cost or deduction not incorporated in the official pricing mechanism.
“The recent deduction of 1.85 percent Sindh Cess from OMCs’ profit margins is neither tenable under law nor consistent with the established regulatory mechanism,” the association said. It added that the industry was already functioning under extremely thin profit margins that barely ensure operational sustainability, and any additional cut would make business operations unviable, risking supply chain disruptions.
OMAP stressed that petroleum products are regulated commodities whose prices are fixed by the government, and any new levy, cess, or tax imposed by a federal or provincial authority must first be integrated into the Oil and Gas Regulatory Authority’s (OGRA) approved pricing formula. “Unless this 1.85 percent cess is incorporated within the regulated price mechanism, its implementation cannot and must not be applied to OMCs,” the association maintained.
The association has called upon the Ministry of Energy (Petroleum Division) to immediately suspend enforcement of the cess until it is duly reflected in the government-notified price structure. OMAP argued that premature implementation would violate the Petroleum (Marketing) Rules, the OGRA Ordinance, and established pricing principles.
“We urge the authorities to intervene urgently and suspend any such deduction or adjustment until the matter is legally reviewed and appropriately resolved through inclusion in the official pricing formula,” said OMAP Chairman Tariq Wazir Ali, warning that failure to act would undermine investor and operator confidence in the country’s regulated petroleum sector.
