Federal cabinet has blocked a proposal approved by the Economic Coordination Committee to raise commissions for petroleum dealers and profit margins for oil marketing companies, making the increase contingent on full digitisation of the petroleum supply chain by June 1, 2026, as reported by Dawn. The ECC had earlier approved a two-phase increase totaling Rs2.56 per litre, with Rs1.22 per litre allocated for OMCs and Rs1.34 per litre for dealers, aimed at improving profitability across the sector. The first phase was set for December 2025, followed by a second phase in 2026, tied to supply chain digitisation.
Prime Minister Shehbaz Sharif opposed the phased hike, insisting that no margin increases be implemented until the entire petroleum distribution system is digitally connected. The digitalisation effort is intended to address smuggling and product adulteration, which currently cause revenue losses estimated at Rs300-500 billion annually. The initiative will link sales and stock records with key government agencies, including Oil and Gas Regulatory Authority, Federal Board of Revenue, and the Petroleum Division, ensuring greater transparency and regulatory oversight.
The Petroleum (Amendment) Act, passed in August 2025, mandates the digital tracking of petroleum products from production to sale. This law also includes strict measures against smuggling, illegal transportation, and unauthorized petrol pumps, aiming to protect both government revenue and the commercial interests of local refineries and OMCs. Stakeholders have long called for stronger mechanisms to combat illicit trade in petroleum products, which undermines profitability and affects operational efficiency across the sector.
Although product prices were revised downward in December 2025, the planned margin increases for dealers and OMCs were not implemented. Industry representatives have welcomed the government’s focus on digitisation, noting that a fully digital supply chain could reduce leakages, improve regulatory compliance, and streamline operations. The cabinet’s decision signals a shift toward integrating technology into Pakistan’s energy sector, ensuring that future pricing and profit adjustments are transparent, verifiable, and aligned with national digitalisation goals.
The government is now prioritising the completion of digital tracking systems, with June 1, 2026 set as the deadline for implementation. Once operational, this system is expected to provide real-time monitoring of petroleum flows, enable data-driven policy decisions, and enhance accountability throughout the distribution network. Full implementation of the proposed margin increases will follow, reinforcing efficiency and compliance while supporting OMCs and dealers in a structured, technology-driven framework.
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