ISLAMABAD: The federal cabinet today blocked an increase in petroleum dealers’ commissions and oil marketing companies’ profit margins that the Economic Coordination Committee approved early last month. According to informed sources, the cabinet linked the proposed relief to the complete digitisation of the petroleum supply chain.
Sources said that Prime Minister Shehbaz Sharif led the decision and attached strict conditions to the ECC-approved Rs2.56 per litre increase for the oil industry’s retail business. Earlier, on December 9, Finance Minister Muhammad Aurangzeb chaired an ECC meeting that approved the margin hike in two phases to improve the financial position of oil marketing companies and their dealers.
The ECC stated that it had revised margins on petrol and high-speed diesel in line with the Consumer Price Index for fiscal years 2023-24 and 2024-25. It capped the increases between 5 percent and 10 percent and allowed half of the hike immediately, while making the remaining portion conditional on digitisation progress.
Prime minister insists on 100 percent digital tracking
Under the ECC plan, OMCs were to receive an additional Rs1.22 per litre, while dealers were to get Rs1.34 per litre, implemented in two equal installments. However, the government did not apply the revised margins during the December 15 and December 31 price revisions, despite sharp cuts in fuel prices.
Officials said the prime minister opposed the phased margin hike and insisted on full digitisation before any increase takes effect, potentially from June 1, 2026. The government has already passed enabling legislation to digitise the petroleum sector from production to retail sales.
The Petroleum (Amendment) Act 2025 mandates technology-based tracking of petroleum products to curb smuggling, adulteration, and illegal sales. Authorities estimate that these practices cause annual revenue losses of Rs300 to Rs500 billion, along with environmental and engine damage.
Meanwhile, refineries and oil marketing companies continue to urge stricter border controls and domestic enforcement. They argue that unchecked smuggling, including LPG, undermines legitimate businesses and reduces government revenue.
