KARACHI : Oil Marketing Association of Pakistan (OMAP) has protested against Sindh Government’s decision of Cess Collection without price adjustment.
In this regard OMAP has written letters to Federal and Provincial Authorities against this unjustified move of Provincial Government.
” we wish to lodge a strong and urgent protest on behalf of all Oil Marketing Companies (OMCs) against the recent implementation of the Sindh Government Infrastructure Cess Tax @ 1.85%, which has been enforced without its proper incorporation into the regulated pricing structure. This levy translatesto an additional burden of approximately PKR 2.5 to PKR 3 per liter, directly eroding the already thin margins of OMC’s and
threatening their operational viability.
It is imperative to emphasize that OMCs operate in a fully regulated environment, wherein product pricing, margins, and all cost elements are determined strictly under the prescribed formula. Therefore, OMCS have no legal or operational discretion to absorb anyadditional cost or deduction beyond the approved price formula. The recent move to impose or deduct 1.85% of the Sindh Cess from
OMCs’ profit margins is neither tenable under law nor consistent with the established regulatory mechanism.
OMCs are already functioning under an extremely thin and insufficient profit margin that barely allows operational sustainability.
OMAP is of the view that deduction of an additional 1.85% from such limited margins will make business viability impossible, leading to operational and supplychain disruptions. This situation contradicts the very objective of the regulatory framework, which is to ensure fair return and uninterrupted petroleum supply.
” Since petroleum products are regulated items and their prices are determined by the government, any levy, Cess, or tax imposed by a provincial or federal authority must first be incorporated into the pricing formula. Unless this 1.85% Cess is integrated within theregulated price mechanism by OGRA, the implementation of this deduction cannot and must not be applied to OMCs, ” the Association added.
OMAP further stated that n view of the above, it makea a strong legal plea that Ministry of Energy, Petroleum Division, being the competent body, should
immediately halt implementation of this decision until this Cess is duly reflected in the government-notified price structure. Any premature implementation would be in violation of the Petroleum (Marketing) Rules, OGRA Ordinance, and established pricing principles.
” We Authorities urgent intervention and direction to suspend any such deduction or adjustment until the matter is legally
reviewed and appropriately resolved through inclusion in the official pricing formula. Failure to address this issue will undermine investor and operator confidence in the regulated petroleum sector, ” said Tariq Wazir Ali Chairman OMAP.
