The oil industry has sought the increase in profit margins after the government has done away with a flexible three to five per cent charge on prices of oil products which yielded a windfall with an increase in international prices and fixed it in absolute numbers. – Online Photo

ISLAMABAD: The Economic Coordination Committee of the cabinet, which meets here on Tuesday, is expected to shower up to 47 per cent profit to oil marketing companies (OMCs) and dealers through an increase in retail petroleum prices.

Describing it as a sort of mini-budget, informed sources told Dawn on Monday that the ECC meeting, to be presided over by Finance Minister Dr Abdul Hafeez Shaikh, would also consider a proposal to impose Rs10 per kg petroleum levy on poor man’s fuel — liquefied petroleum gas (LPG) — to jack up prices ahead of winter to boost earnings as a result of increased consumption.

The sources said the petroleum ministry had moved a proposal to increase OMCs’ margin and dealers’ commission a few months ago, but it was withheld at the last moment because the government did not want to open too many fronts.

At that time, the government had partially deregulated the oil pricing.

The oil industry has sought the increase in profit margins after the government has done away with a flexible three to five per cent charge on prices of oil products which yielded a windfall with an increase in international prices and fixed it in absolute numbers.

Officials said the petroleum ministry had now suggested to the ECC to allow a 70 paisa per litre increase in dealers’ commission on high speed diesel from the existing rate of Rs1.50. The ministry also proposed to increase dealers’ commission on motor spirit (petrol) by 50 paisa per litre.

The proposal seeks to raise OMCs’ margin by 48 paisa per litre on petrol and 41 paisa per litre on diesel.

The existing margin on petrol is Rs1.50 per litre and that on high speed diesel is Rs1.35.

When contacted, Petroleum Minister Dr Asim Hussain confirmed that the ECC would take up the proposal to increase OMCs’ margin and dealers’ commission.

About the levy on LPG, he said the government would mop up the difference between imported and domestic LPG to earn about Rs12 billion, instead of allowing it to go to blackmarketeers.

He said it would not increase LPG prices for consumers.

The ECC is also expected to consider new policies for LPG and LNG (liquefied natural gas).