July 26, 2008	Saturday	Rajab 22, 1429

ISLAMABAD, July 25: The oil marketing companies (OMCs) are learnt to have started pressurising the government to end the freeze on their profit margins on petroleum products and have threatened to shelve their future investment plans.

The government capped the companies’ margins and dealers’ commissions on oil products at the July 1 position to partially contain the impact of international oil prices on consumers.

The dealer commission and company margins have gone up by 40 to 50 per cent since February this year with the rise in international prices.

Informed sources told Dawn on Friday that the OMCs had sent letters to the government to convey their concern over the government decision to freeze their profit margins.

The Total-Parco Company has informed the government that it was surprised to hear about the cap on profits despite its opposition to the move. The company said it had been compelled to reconsider its future investment plans.

It added that representatives of the government and the industry had resolved to negotiate profit margins and then put up the matter before the Economic Coordination Committee (ECC) of the cabinet. But it was shocked to learn that a decision had been taken on the issue without the ECC’s approval.

Chevron-Caltex has also protested against the move and has asked the government to rescind the decision. It said the cap on margins and delayed clearance of the price differential claims (PDCs) could create supply disruptions in September and in subsequent months because of cash flow constraints.

It said the company had to make arrangements in August for oil imports to meet supply requirements for September, but that now seemed difficult.

Meanwhile, the price differential margins payable by the government to the marketing companies and refineries went up to Rs64 billion as of July 31 which also included financial charges of Rs6 billion. In the PDCs, the government has to pay about Rs30 billion to PSO, Rs10 billion to Shell Pakistan, Rs4 billion to Chevron-Caltex, Rs2.4 billion to Asia Petroleum, Rs1.9 billion to Total-Parco, Rs5 billion to Parco, Rs4.8 billion to Attock Refinery, Rs2.5 billion to National Refinery and the remaining amount to smaller companies.

Informed sources said the private oil companies had also asked the government to make arrangements for import of petroleum products by the state-run Pakistan State Oil (PSO) and then sell the same to them in case it did not lift the freeze on profit margins.

The sources said the oil companies had asked the government to control smuggling of high speed diesel to Afghanistan which was resulting in the misuse of subsidy provided by the national exchequer as its benefit was going to the neighbouring country.