Pakistan oil companies urge government to raise fuel margins, citing financial strain

Pakistan's oil marketing companies have urged the government to immediately raise their regulated margins.

The Oil Companies Advisory Council said delays in adjustments, rising operating costs and billions of rupees in unpaid claims have put the downstream petroleum sector under severe financial pressure.

Why are Pakistan's oil marketing companies demanding higher margins?

The OCAC, which represents oil marketing companies, said regulated margins have not been revised since September 2023 despite three completed financial years.

The current margin of PKR 7.87 per litre no longer covers rising operating costs, higher stock-cover requirements and expanding regulatory obligations, the council said in a letter to the government.

What increase has already been approved but not implemented?

The Economic Coordination Committee has already approved a PKR 1.22 per litre increase in the OMC margin, based on national inflation for fiscal years 2023-24 and 2024-25. The adjustment has yet to be formally notified, the council said. The OCAC called for the approved increase to be implemented without further delay.

"The financial position of Pakistan's Oil Marketing Companies has reached a critical juncture," the OCAC said. It called for immediate government intervention to prevent further damage to the downstream petroleum sector.

How have OMCs maintained fuel supplies despite the financial pressure?

OMCs continued to maintain fuel supplies despite mounting financial pressures, including during geopolitical disruptions since March 2026. Companies committed additional funds and assumed greater commercial risks during that period to ensure uninterrupted availability, the council said. They also implemented the government's newly introduced daily petroleum pricing mechanism without delay, despite the operational changes it required.

The OCAC said OMCs were carrying out these responsibilities while operating on a regulated gross margin of about 2%. It described this margin as inadequate given the capital requirements and risks involved in maintaining the country's fuel supply chain.

What liquidity problems are OMCs facing?

The sector faces a liquidity squeeze, with about PKR 66.7 billion in price-differential claims still outstanding. GST and input-tax reimbursements also remain unresolved, the council said. These unpaid amounts have become locked in receivables, adding further pressure on the commercial viability of OMCs.

The council also opposed making completion of the industry's multi-year digitisation programme a condition for granting the approved margin increase. OMCs have submitted a three-year digitisation plan and remain committed to the government's objectives, the OCAC said, but argued that a capital-intensive transformation should not delay an overdue, already-approved margin adjustment.

What could happen if the government delays action?

The council warned that continued financial pressure and regulatory uncertainty could discourage investment in Pakistan's petroleum sector. International participation in the industry has already declined in recent years, and prolonged regulatory intervention could further weaken investor confidence as Pakistan seeks domestic and foreign investment, it said. OMCs have repeatedly invested in energy infrastructure and assumed commercial risks to support national energy security, but the council said the industry cannot keep absorbing rising financial and regulatory costs indefinitely.

What are OMCs asking the government to do next?

The OCAC called for three immediate measures. These are implementation of the PKR 1.22 per litre margin increase approved by the ECC, determination of overdue OMC margins for fiscal years 2025-26 and 2026-27, and a mechanism for timely annual revisions to regulated margins. It also sought an urgent meeting with the government and senior industry representatives to discuss the sector's financial position, saying prompt action was needed to protect the sustainability of OMCs and stability in the fuel supply chain.