ISLAMABAD: The state-owned Pakistan Institute of Development Economics (PIDE) has supported increase in dealers’ commission and oil marketing companies’ (OMCs) margin on the sale of petroleum products.

Based on the recommendations of the PIDE, a government team led by Petroleum Minister Shahid Khaqan Abbasi and a delegation of dealers and retailers had talks on the issue of increase in dealer commission on Thursday but could not reach a conclusion.

Informed sources said the PIDE has estimated Rs2.85 per litre and Rs2.40 per litre as dealers’ expenses on petrol and high speed diesel, respectively. The dealers are currently charging Rs2.78 and Rs2.30 per litre as their commission on petrol and diesel under an interim arrangement with the government.

A leader of Pakistan Petroleum Dealers’ Association Abdul Sami Khan told Dawn that the PIDE’s ‘favourable’ report had strengthened their demand for increase in their margin because they had estimated fair expenses on handling and sale of petroleum products and they would be justified to ask for some profit over and above the government audited expenses.

He said the meeting with the government team took place in a very positive atmosphere. He said the dealers demanded Rs4.25 per litre as their commission on petrol and Rs3.50 per litre on high speed diesel.

He said the petroleum minister did not promise any increase in their return as such but promised to take up the matter with the Economic Coordination Committee (ECC) of the Cabinet for a decision.

A government official confirmed that PIDE had estimated higher expenses that currently being given to both the dealers and marketing companies and attributed such an increase to a number of factors including general inflation.

He said Mr Abbasi told the dealers that since any change in their commission would have a direct impact on the people even though some government companies would also be among the beneficiaries of a higher return, the government will have to strike a balance between the interests of the people and the dealers as both stakeholders were PML-N’s voters and supporters.

He said the views of the dealers along with PIDE study would be shared with the ministries of finance and planning besides Oil and Gas Regulatory Authority (Ogra) and Federal Board of Revenue to seek their input once the petroleum ministry completed its consultation with oil marketing companies over the next week.

In the meanwhile, he asked the dealers to submit a formal proposal for increase in their commission along with their estimates of expenses and desired that the dealers and companies should instead reduce their rate of return to help the government provide some relief to the consumers.

An official said the government would complete the consultation process over the next two weeks and take a decision immediately.

At present, the OMCs are entitled to Rs2.23 per litre margin on petrol and Rs1.86 per litre on HSD. On July 31 this year, the ECC had directed the petroleum ministry to get an independent study of the dealer commission and OMC margin on the demand of the industry to increase their return.