ISLAMABAD: The government approved on Tuesday an increase of 23 to 47 per cent in profit margins of oil marketing companies and dealers, but directed the petroleum ministry to apply it in three phases to avoid a sudden hike in petroleum product prices.

Petroleum Minister Dr Asim Hussain told Dawn after a meeting of the Economic Coordination Committee of the cabinet that the increase in commissions would be made on the basis of monthly changes in international prices and retail prices would not go up suddenly.

“This may take four months or three months depending on price situation,” he said.

The ECC meeting presided over by Finance Minister Dr Abdul Hafeez Shaikh agreed to increase OMC margin and dealers’ commission on petrol by 32 per cent and 26.7 per cent, respectively, besides approving changes in the Liquefied Natural Gas policy. The OMCs margin on petrol will go up by 48 paisa per litre to Rs1.98 from Rs1.50 and dealers’ commission by 50 paisa to Rs2.37 per litre from Rs1.87.

On high speed diesel, the OMC margin and dealers’ commission has been increased by 23.3 per cent and 46.7 per cent, respectively.

As a result, the OMCs margin will go up by 41 paisa per litre to Rs1.76 per litre from Rs1.35 and dealers’ commission by 70 paisa per litre to Rs2.20 per litre from Rs1.50.

The committee approved resumption of POL supplies to four PSO depots which had been closed down about eight years ago as part of initial deregulation of petroleum sector during General Musharraf’s government. The revived depots and storages are Faqirabad, Kotla Jam, Sahiwal and Shershah.

The petroleum ministry did not take up its summary regarding petroleum levy on LPG.

The ECC approved nine major changes in the LNG policy, saying it wanted to facilitate potential investors and introduce more clarity and predictability.

The condition of having long-term supply agreement or commitment as well as availability of sufficient natural gas reserves for a minimum of 20 years has been abolished and prior permission of the government of Pakistan for spot purchase of LNG will no more be required.

The ECC also decided that SSGCL and SNGPL will not sell gas priced under weighted average cost of gas mechanism to industries selected by GOP to use regasified LNG (RLNG) from time to time.

A new clause requires licensees to furnish guarantee against its delivery commitment to provide predictability to domestic investors to plan their industrial and commercial activities.

Another new clause says that in case of failure of the licensee to deliver LNG by stipulated date, its first right to third party access will stand waived off.

A clause related to involvement of coast guards or any other agency to control activities of entry and exit of shipping traffic and requirement of security escort through coast guards at the expense of LNG developer, LNG terminal owner and operator and LNG buyer has been deleted.

Moreover, port authorities would be required to convey their decision on acceptance of site in one month of submittal of NOC from the Sindh Environmental Protection Agency, Quantitative Risk Assessment Study and Navigational Simulation Study.

Similarly, a clause related to Ogra’s discretionary rights to grant exemptions from mandatory regulated third party access and negotiated third party access requirements has been deleted while the project proponents have been allowed to set up gas storage facility subject to applicable rules and Ogra has been mandated to determine storage tariff.

The committee will take up tariff rationalisation in its next meeting.