An increase of 50 to 70 paisas per liter in the oil marketing companies margins on petrol and diesel respectively would provide the much-needed respite to the sector.

The ministry of petroleum and natural resources has reportedly assured the OMCs that it will shore up their marketing margins on petroleum products as the rupee depreciation and high inflation continue to eat away overall profits of the OMCs.

Mr Atif Zafar at JS Global said that “The threat of foreign players exit where Chevron has already shown its intention to do so is likely to accelerate government action.”

The OMCs have been demanding the same as their margins remain fixed for petrol at PKR 1.98 per liter and diesel at PKR 1.76 per liter while high inflation and the rupee depreciation eat away their overall profits.

Mr Zafar said that the government had increased the same margins by 30% to 32% in August 2011 for identical reasons. We believe potential exit by foreign players where Chevron is already showing intention is likely to prompt timely action by the government.

Source - The News.com

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