OCAC proposes to increase OMC margin by PKR 4.78/ltr

After the Oil and Gas Regulatory Authority (OGRA) proposed revising margins, the Oil Companies Advisory Council (OCAC) proposed increasing OMC margins by PKR 4.78/ltr to PKR 12.65/ltr from the current PKR 7.87/ltr.
To recall, OGRA had proposed increasing the margins for Oil Marketing Companies (OMCs) during October ’24 on MS and HSD by PKR 1.35/ltr to PKR 9.22/ltr.
However, according to media reports, the OCAC has labelled OGRA’s proposed margins as insufficient to cover the rising finance costs for maintaining stock cover, turnover tax, handling losses, demurrage costs, financing unadjusted sales tax, and other operational expenses.
Our analysis indicates that if the margin revision aligns with OCAC’s proposal, the annualized earnings impact will be PKR 41.78/share, PKR 29.59/share, and PKR 15.55/share for PSO, APL, and SHEL.
During 4MFY25, MS and HSD sales grew 4% and 5% YoY, respectively. Considering this trend, we anticipate that MS and HSD volumes will sustain this momentum and achieve 5% YoY growth each in FY25.

Courtesy – AHL Research