Prime Minister Rejects Fuel Margin Hike

The federal cabinet has halted a planned increase in profit margins for oil marketing companies (OMCs) and petroleum dealers, reversing an earlier decision by the Economic Coordination Committee (ECC). Prime Minister Shehbaz Sharif has reportedly linked any future increase to the complete digitization of the petroleum supply chain to prevent smuggling and theft.

ECC’s Original Plan 

Last month, the ECC had approved a total increase of Rs. 2.56 per litre on petrol and diesel to boost industry profitability. The plan was legally structured in two phases:

Phase 1: An immediate increase of Rs. 1.22 for OMCs and Rs. 1.34 for dealers was set to begin in December.

Phase 2: The remaining increase was scheduled for June 1, 2026, subject to progress on digital reporting.

Currently, OMCs receive Rs. 7.87 per litre while dealers get Rs. 8.64. The proposed hike would have eventually taken their margins to Rs. 9.10 and Rs. 9.98, respectively.

PM Intervenes for Digitization 

Despite the ECC’s approval, the government did not implement the revised rates in recent price notifications. According to the story of Dawn, the Prime Minister opposed the unconditional, immediate hike. Driving the “Digital Pakistan Initiative,” the PM insisted that the full increase must be conditional on 100% digitization of the sector, from stock to sales.

Combating Revenue Loss 

The government’s hard stance stems from an estimated annual revenue loss of Rs. 300-500 billion from fuel smuggling and adulteration. By enforcing a digital tracking system, mandated by the Petroleum (Amendment) Act 2025, the state aims to monitor all products from import to retail, curbing illegal trade before granting further financial relief to dealers.