Petroleum marketing is a high-volume, low-margin business where the accounting risk sits in two places: the levies that pass through your accounts without ever being yours, and the stock that moves before the documentation catches up.
Levies are not revenue
The regulated price build-up includes levies and margins that you collect and remit. Where these are recognised through revenue and cost of sales without a clean reconciliation, the reported figures overstate both, and the liability position at any date becomes difficult to prove. The reconciliation between volumes lifted, levies collected and levies remitted is the single most important control in the business.
Stock is volumetric
Product is measured, not counted. Temperature correction, evaporation, meter tolerance and transit losses all produce genuine variances, and the tolerance for each should be defined in advance rather than argued after the count. Where no tolerance is defined, every variance looks like an exception and none of them get investigated properly.
Credit is concentrated
A dealer network is a receivables book, and it is usually concentrated. Where a small number of dealers carry a large proportion of the balance, and where credit limits were set years ago and never revisited, the expected credit loss provision is doing more work than anybody has tested.
Working capital under levy pressure
Levies are remitted on a timetable that does not always match collection from customers. That gap is financed by you, and in a thin-margin business it is frequently the difference between a business that works and one that does not.
Where margins are set and levies enter your accounts
Stock measured rather than counted, with defined tolerances
Dealer credit, usually in a small number of accounts
Findings
What we find in petroleum marketing
The same four issues appear in most OMCs we audit, and they are all reconciliation problems rather than judgement problems.
- Levies recognised through revenue without a clean collected-to-remitted reconciliation
- Stock variances outside defined tolerance, or no tolerance defined at all
- Dealer credit limits set years ago and never revisited against actual exposure
- Expected credit loss provision carried forward rather than recalculated
- Station and depot leases not assessed under IFRS 16
- Transit losses absorbed without being analysed by route or carrier
- Working capital gap between levy remittance and customer collection unmodelled
- Reconciliation to NPA records performed annually rather than monthly
Services
What energy clients use us for
Audit leads, and the controls work usually follows the first management letter.
Statutory audit
Levy reconciliation, volumetric stock, dealer receivables and lease accounting.
Explore →Internal controls review
Stock movement authority, dealer credit approval and the levy reconciliation process.
Explore →VAT and indirect taxes
Input tax recovery since the 2026 reset, which is material at these volumes.
Explore →CFO services
Working capital modelling across the levy remittance and collection cycle.
Explore →Questions
Questions from oil marketing companies
How should levies be presented?
What stock loss is acceptable?
Are station leases on the balance sheet?
Does the 2026 VAT change matter at our volumes?
Next step
Send us your last levy reconciliation.
If one exists and is current, the business is probably in better shape than most. If it does not, that is where we would start.