Amidst speculations about an impending decrease in petrol prices, Attock Petroleum, an oil marketing company, has launched an exclusive campaign known as the “Petrol Offer.” The primary objective of this campaign is to sell off as much gasoline and diesel as possible before the biweekly price adjustment scheduled for October 15, 2023.
This proactive strategy is aimed at mitigating potential inventory losses in the event that the government of Pakistan indeed reduces petroleum product prices.
The “Petrol Offer” introduced by Attock Petroleum includes a substantial discount of Rs5 per liter for customers who exceed specific fuel thresholds. For four-wheeler vehicles, the threshold is set at 20 liters, while for two- and three-wheeler vehicles, it’s established at 5 liters.
Industry analysts have noted that significant inventory losses could be a possibility if the forthcoming announcement by the Oil and Gas Regulator Authority (OGRA) results in a considerable price reduction.
This risk justifies offering discounts to sell larger volumes of fuel before adjustments in inventory valuations become necessary.
Furthermore, it’s important to understand the dynamics of how oil marketing companies (OMCs) operate in this context. When an OMC imports a fuel product such as petrol or diesel for Rs100, it can only sell it at a price determined by the government.
If the government sets the price at Rs 105, the OMC makes a profit of Rs5 per unit. Conversely, if the government sets the price at Rs95, the OMC incurs a loss of Rs5 for each unit sold.
The government’s goal is to ensure the financial stability of OMCs while maintaining control over pricing. Consequently, OMCs are obliged to time their actions carefully to navigate the balance between profit and potential losses.
The current strengthening of the Pakistani rupee and the global decline in petroleum product prices have led to speculations regarding a possible decrease in fuel prices.
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