The Oil Marketing Association of Pakistan (OMAP) fears a serious fuel crisis is imminent unless the government addresses the reluctance of banks to open letters of credit to oil Companies.

A delegation from the Pakistan Oil Marketing Association will met Federal Energy Minister Hammad Azhar to discuss long-term issues such as annual OMC margin increases, license renewals, expansion and other supply chain or minimum tax issues. …

In a letter to Energy Minister Tariq Wazir Ali, chairman of OMAP, asked the relevant minister to hold an emergency meeting to discuss their issues as banks were reluctant to open letters of credit. If no action is taken, the association fears that the country will face an acute shortage of fuel.

According to the letter, the issue of increasing the sales volume or minimum tax rate applied to the open method from 0.5% to 0.75% in 2019 negatively impacted the profit and cash flows of the open reconciliation method. The Association requires that the sales tax rate be rationalized / aligned with the profitability underlying the open matching method. and is tied to the open method of reconciling gross margins instead of revenues.

The letter states that the current margin is Rs. 2.97 / Liter was last reviewed in April-2021, nine months late. This increase is in no way a fair compensation for the growth seen in this sector. The revision of the current margin is still ongoing from 1 July 2021. He also stated that, according to the ECC decision, an independent study by the Pakistan Institute for Development Economics should be completed by 2019. There were many delays.

The letter also adds that since the renewal of the OMC license is being unnecessarily postponed, the problems will have a decisive and negative impact on the routine operations. The cost of doing business is a dominant factor and a major barrier to new domestic and foreign investment.

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