Oil companies demand further increase in prices

ISLAMABAD: The oil industry is determined to further increase the prices of petroleum products as the industry is facing a cash flow deficit of Rs35.88 billion due to the lower exchange rate and difference in custom duty, ARY News reported on Friday, quoting OCAC letter to OGRA.

Oil Companies Advisory Council (OCAC) penned down a letter on behalf of Oil Marketing Companies (OMCs) and refineries to Oil & Gas Regulatory Authority (OGRA) and the federal government about the pricing mechanism as well as the long pending increase in the margins of OMCs.

The oil industry’s body drew attention to the fact that the OMCs are facing a considerable cash flow deficit of Rs 35.88 billion due to the rupee devaluation as well as a difference of Rs 2.93 billion in customs duty.

The letter also mentioned that the government has reduced price components unjustifiably, pinpointing that exchange loss adjustment has been reduced by Rs22.72/litre on petrol and Rs74.91 on High-Speed Diesel (HSD).

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As the harvest season is about to begin, the oil sector warned the government that the oil industry will not be able to fulfil the increased demand if the current restrictive pricing continues.

In the letter, the OCAC stated that the authorities are failed to implement the oil pricing as per the government-approved formula for the past one-year due to which the OMCs are facing a loss of billions on daily basis.

The OCAC demanded authorities to set the oil prices based on a formula approved by the government as well as the authorities should take appropriate measures to steer the oil companies out of the financial crisis.