ISLAMABAD: The ministry of petroleum and natural resources on Monday partially accepted a demand of the oil marketing companies and dealers for increasing their margins on sale of petroleum products.

A senior official of the petroleum ministry told Dawn that a summary seeking increase in profit margins of the oil companies and dealers had been circulated to the ministries concerned for comments before it was presented to the Economic Coordination Committee (ECC) of the cabinet for formal approval.

He said the ministry had recommended an increase of 25 paisa and 10 paisa per litre increase in the OMCs commission on sale of petrol and high speed diesel respectively.

Likewise, it had also recommended 10 paisa per litre increase in the margins of dealer on the sale of petrol while no increase had been suggested for dealers on account of HSD.

The official said the basic demand from the OMCs and dealers for restoration of commission as percentage of sale price of petroleum products had been rejected.

Over the last few weeks, the oil marketing companies and petroleum dealers had been pushing for substantial increase in their commissions and margins on sale of petroleum products before it completed constitutional term next month.

Last week, the petroleum dealers association had told the ministry that inflation had increased by about 22 per cent in last two years and tax burden had increased, resulting in increase in the cost of business. Therefore, the running of petrol pumps had become unviable.

They said the dealer margins used to be 4 per cent of the per litre product cost that had been reduced to 2 per cent in 2010 and then fixed in absolute terms at Rs2.30 per litre on petrol and Rs2.20 per litre on high speed diesel with a promise that these would be gradually increased. The dealer margins remained fixed at that level while all other business costs had increased.

Therefore, the dealers demanded to increase the per litre margins to be increased by Re1 per litre both on petrol and high speed diesel.

The OMCs also pleaded similar arguments to justify about Re1 per litre increase in their commissions from existing level of Rs1.58 on petrol and Rs1.76 per litre on High speed diesel.