KARACHI, March 14: The Oil Companies Advisory Committee (OCAC) may increase the prices of petroleum products in its fortnightly review on Friday following upward movement in prices of crude oil and finished products in the world markets.

The government’s approval of raising the margin of oil marketing companies (OMCs) to three per cent from two per cent in the first phase and distributors margin to four per cent from three per cent, just a day ahead of the OCAC meeting, will put additional burden on the buyers to pay at least two per cent more for POL products if the margin increase become effective from Friday.

Till evening, OMCs like Shell Pakistan and Pakistan State Oil have not received any notification regarding the margin increase, according to their officials. Similar reply also came from the spokesman of the OCAC.

Officials in the OMCs were not ready to quote an actual price surge of POL products on Friday in view of margin rise and global price hike, but said that increase in domestic oil prices seems quite imminent keeping in view the rising trend in global price of crude oil due to Iraqi crisis and reports of depleting US oil reserves.

However, on the impact of margin on local prices, OMCs and OCAC officials said, “Much will depend on the notification. We cannot predict actual impact on prices until we cannot see it.”

Oil analysts are of the view that the prices of petroleum products are expected to rise by at least five to 10 per cent even if the raise in margins is excluded in the fortnightly price fixation and only fluctuations in crude price is taken.

They said if the two per cent increase in margins is also included, as per decision of the Petroleum Ministry, then the oil prices will surge by at least seven to 12 per cent.

Oil analysts said that the global crude oil prices have surged to $24 a barrel as compared to $19 a barrel in the last week. If an average price of crude is taken at $22 a barrel in the last 15 days, it is still on the higher side as compared to previous fortnight price of $19-20 a barrel.

OCAC determines fortnightly prices after taking fluctuations in the benchmark crude oil price (Light Arabian) whose prices have also gone up following increase in brent crude oil.

The exchange rate — the rupee-dollar parity remained somewhat stable during the fortnight otherwise rupee depreciation against the greenback would have made imports more costlier.

On oil margin increase, Research Head of Invest Cap and Securities, Mohammad Sohail said that a one per cent increase in OMCs’ margin will increase their profitability by 40-50 per cent. In the year 2002-2003, the cumulative impact of margin revision on earnings of PSO and Shell will be over 50 per cent.

He said it was a perfect time for the government to play its trump-card in order to attract maximum bidding for the privatization of the PSO. Expressions of Interest (EoIs) has also been invited by the Privatization Commission on Friday to sell its 51 per cent share.