Oil Marketing Association of Pakistan (OMAP) has asked Minister of State for Petroleum Musadik Malik to play his vital role in ending Sindh Cess Tax which will support the Oil Industry in the country. In a letter written to Minister of State Musadik Malik, Chairman OMAP Tariq Wazir Ali demanded his immediate intervention to safeguard the interests of the oil marketing sector and the entire petroleum industry. He wrote in the letter that under the Sindh Government Infrastructure Cess Tax, a levy of 1.25% is imposed on all imports made through Karachi Port. This issue holds significant gravity and has directly impacted the profit margins of OMCs, leading to a substantial decline of nearly 40%, he said adding that it is essential to highlight that due to the regulated formula governing the determination of prices for diesel, gasoline, and other products, any new component must be incorporated into the pricing formula. Given the critical nature of this matter, which further compounds the challenges faced by the struggling oil industry, we humbly request your prompt attention to save the petroleum industry from impending disaster, he explained.
Talking about role of Oil and Gas Regulatory Authority (OGRA), Tariq Wazir Ali expressed that OGRA plays a pivotal role in regulating oil prices. “However, the recent imposition of the Sindh Cess Tax has not been integrated into the existing price mechanism formula. As a consequence, this tax is substantially eroding the margins of Oil Marketing Companies (OMCs). The burden of this tax is exacerbating the challenges faced by OMCs, who are already grappling with survival in an intensely competitive industry. The lack of an inclusion mechanism for this tax in the pricing formula has resulted in a significant portion of OMCs’ margin being absorbed. This situation further exacerbates the difficulties and hardships faced by OMCs”. He added, “In light of these serious concerns and the importance of this matter to the OMCs, we respectfully request your intervention to instruct OGRA, being the regulatory body, to expeditiously address and resolve this issue without any delay. Any further delay would have severe repercussions for the OMCs, and OGRA would bear full responsibility for the resulting adverse consequences. The OMCs are already burdened with the heavy costs resulting from non-industry friendly policies imposed by OGRA, despite our repeated warnings and requests. Any further delay in addressing this issue will lead to additional devastation for the petroleum industry”.
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