ISLAMABAD: Petroleum Marketing Companies (OMC) were assured by the government on Thursday of a downward revision of the turnover tax on petroleum products in the FY23 budget, while promising that their trade credit problem would also be solved.
The WTO want the turnover tax to be reduced from 0.5% to 0.75%.
A promise of effect was made by the Minister of State for Petroleum Dr. Musadik Masood Malik during a meeting with representatives of the petroleum sector. Senior officials from the oil division also attended the meeting.
“I will personally sensitize the Minister of Finance on very important issues and help reduce turnover tax in the 2022-23 budget,” Malik said.
The Petroleum Division has also pledged to the petroleum sector to ensure the intervention of the Ministry of Finance to induce the State Bank of Pakistan to persuade foreign banks to provide guarantees to OMC/refinery LCs for the import of petroleum products.
The CMOs also argued that the current financial situation has made the oil industry extremely vulnerable and fragile, which could break the supply chain.
However, during the meeting, the OMC also raised the issue of one-month delayed release of PDC (differential price claim) payments, causing the multiplication of OMC financial miseries that can disrupt fuel imports, saying that the timely release of the PDC amount can reduce the financial constraints to some extent. However, OMC has told the government that the current stock of POL and fuel is at a reasonable level, but if the status quo continues, after mid-June the supply of POL products will start to tighten and eventually collapse.
Relevant officials said MOC markup on diesel and gasoline is regulated at 2-3% for end consumers, but MOCs are subject to a turnover tax of 0.75% , which resulted in 30% of regulated margins, creating more losses, financial costs and deterioration of working capital for MOCs.
The CMOs earlier, through a letter from OCAC, written on May 26, 2022, followed by the SOS letter on May 30, campaigned against the liquidity crisis by arguing that the fuel supply of the country is now also severely threatened by limited credit facilities, high inflation and interest rates and rising USD-PKR parity.
The OMC, through recent official correspondence, has also drawn the government’s attention to the bitter facts that the liquidity situation has not improved at all despite the assistance of the State Bank of Pakistan.
According to the press release issued by the Petroleum Division, the OMC has stated categorically that it has sufficient stocks of petroleum products for a steady supply in the country and is committed to maintaining the integrity of the supply chain. .