New Pricing Structure Impacts Omani Oil Profits

New Pricing Structure Impacts Omani Oil Profits

All three fuel marketing companies working in Oman – Oman Oil Marketing, Shell Oman, and Al Maha – have warned that a new pricing structure adopted by Omani Authorities earlier this year has begun to impact profits, the Oman Observer reported.

David Kalife, CEO of Oman Oil Marketing Company, a subsidiary of Oman Oil Company, said that the reduced margins offered on motor fuels from the new fuel logistics terminal at Al Jifnain are making a dent in the profit margins of all three marketing companies.

Talking about the scale of the impact, he said, “It’s a big one; we are not talking about a few percentage points; it’s impacting our bottom-line.”

In quarterly reports presented to the Capital Market Authority (CMA), all three companies expressed their concerns over the new pricing structure affecting their profits.

Oman Oil Marketing’s report noted that the move to the new Al Jifnain Terminal has greatly impacted the company’s profits.  Shell Oman also attributed a drop in quarterly profits to the revised margin structure and the new supply point.

Al Maha echoed these concerns, saying that the new pricing structure has had a negative impact on its gross margin, adding that it is negotiations with the relevant ministries to mitigate the impact of the new policy.

The new pricing structure was introduced after the inauguration of the Al Jifnain Terminal, constructed by Orpic, Oman’s flagship refining and petrochemicals company.

Kalife stated that the three marketing companies have joined forces to try and persuade authorities to roll back the revised pricing structure, adding that with the added pressure on margins, the companies will find it difficult to meet their growth strategies and maintain their customer service standards.


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