LAHORE, Feb 12: An oil marketing company (OMC) has sounded a warning (to the government) that it would be forced to quit its plans for future investment in Pakistan if the margins on the oil sales prices are not increased to four per cent from the existing two per cent.

“We’re in the red due to lower margins on the sales price. Yes we are suffering losses. If we weren’t (incurring the losses), we wouldn’t have asked for raising the margin,” Total Parco Pakistan Ltd chief executive officer Bernard Pinnoy told Dawn here on Tuesday.

Pinnoy claims that the foreign oil companies like TotalFinaElf had decided to invest in Pakistan because the government had some seven years back assured them that it would allow adequate margin on the oil sales price to enable them to recover their investment on petrol stations and provision of better, international quality services to the customers.

“If we are not allowed an increase in our margin, we’d be left with no other choice but to review and stop our (further) capital investment plans in this country,” he said.

In response to a query, Pinnoy said his company would wait and see as to what happens on July 1 when according to the government announcements the petroleum prices would be deregulated as “we do not as yet know how the deregulation would take place.”

“If the margins are not increased (now), we’d have to see what happens on July 1,” he stated, adding the OMCs had been stressing for increasing the margin on sales prices to five per cent. “Over the next four years, we’d be operating at a loss if our margin is not increased,” he said.

TotalFinaElf, a French oil company ranked amongst the top five petroleum companies of the world with 20,000 petrol stations in about 100 countries, holds 60 per cent equity in the joint venture with Pak Arab Refinery (Parco) —- Total Parco Pakistan Ltd. The total equity of the joint venture company will rise to Rs400 million by the end of this calender year.

Total Parco Pakistan plans to establish 450 petrol stations in the country over a period of 15 years at a rate of 30-36 stations a year.

Pinnoy said the lower margins would not only hamper their plan to further establish petrol stations in the country but also keep the international services away from the reach of the customers.

He said it cost around Rs20 million to set up a petrol station in a city and about Rs10 million along the highways. “It does not include the price of land,” he added.

TotalFinaElf is also involved in an “offshore oil exploration” project near Karachi in addition to having a small investment in the lubricant business.

To a question, Pinnoy said his “company would decide to participate in the public sector oil company as well as fields after the government puts them to sale.” “We still have to see what is to be offered, and under what terms and conditions. If the conditions are favourable, then our group may consider to participate in the privatization,” said the CEO.