LAHORE: The Oil Marketing Association of Pakistan (OMAP) has urgently called upon Minister of State for Petroleum, Musadik Malik, to take decisive action in bringing an end to the Sindh Cess Tax, which is significantly impacting the nation’s oil industry.
It is pertinent to mention here that the Sindh Cess Tax is a 1.25% levy imposed by the Sindh Government Infrastructure Cess Tax on all imports made through Karachi Port. This tax has the potential to directly impact the profit margins of Oil Marketing Companies (OMCs) by nearly 40% if enforced. The omission of this tax from the existing pricing mechanism has further compounded the challenges faced by the struggling oil industry.
However, in a formal letter addressed to Minister Musadik Malik, Tariq Wazir Ali, Chairman of OMAP, highlighted the critical importance of the Minister’s intervention to safeguard the interests of the oil marketing sector and the entire petroleum industry. The Sindh Government Infrastructure Cess Tax currently imposes a 1.25% levy on all imports made through Karachi Port, severely affecting the profit margins of Oil Marketing Companies (OMCs). According to Ali, this has resulted in a substantial decline of nearly 40% for the OMCs.
Moreover, the letter underscored the necessity of incorporating any new tax components into the pricing formula that governs the determination of prices for diesel, gasoline, and other petroleum products. The omission of this tax from the existing pricing mechanism has further compounded the challenges faced by the struggling oil industry.
Chairman OMAP explained the pivotal role played by the Oil and Gas Regulatory Authority (OGRA) in regulating oil prices. However, the recent imposition of the Sindh Cess Tax has not been integrated into the price determination formula, causing a significant erosion of OMCs’ margins. This additional burden is intensifying the hardships faced by OMCs, who are already grappling with survival in an intensely competitive industry.
“We respectfully request your intervention to instruct OGRA, being the regulatory body, to expeditiously address and resolve this issue without any delay,” stated Chairman. He warned that any further delay in addressing the matter would have severe repercussions for the OMCs, and OGRA would bear full responsibility for the resulting adverse consequences. The OMCs are already burdened with heavy costs resulting from non-industry-friendly policies imposed by OGRA, despite repeated warnings and requests.
The Chairman of OMAP concluded by urging Minister Musadik Malik to act promptly and save the petroleum industry from impending disaster. The industry’s survival depends on a swift resolution of the Sindh Cess Tax issue, and the entire oil marketing sector is looking to the Minister of State for Petroleum for support and relief in these challenging times.
