Pakistan OMCs: Competition set to rise as threats of new entrants are building up
​OGRA recently issued OMC licenses to 21 potential new entrants; presently there are 12 OMCs. Therefore, this can amplify competition in the industry in the long run. Govt’s inclination towards more deregulation in future, linking OMC margins with inflation, and robust demand are supporting factors for new entrants.
Possible strategy will be initially setting up pumps on the highways/outskirts, building up storage and ultimately moving into the cities. However, present environment requires significant financial muscle to be able to compete with the incumbents. But it is also an opportune time to raise capital.
PSO may be most vulnerable to lose market share due to its size, but its investment in PRL can be a mitigating factor. APL needs to strengthen presence beyond Punjab. HASCOL might soon be competing with an OMC that matches its vigor.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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