ISLAMABAD: The federal cabinet has reportedly approved an increase in dealers’ margin to Rs7 per litre on the motor spirit (MS) and high-speed diesel (HSD) from the current Rs4.90 and Rs4.13, respectively.
The approval with respect to increasing in dealers’ margin was sought through the circulation of a summary. After the approval, the decision of the cabinet is communicated to the concerned Division for notification and implementation.
The proposal of the Petroleum Division was that the increase in the proposed margins for dealers may be accounted for in the forthcoming selling price from the 1st August 2022, in accordance with the agreement with the dealers.
The OGRA being the regulator will monitor the margins accounted for in the ex-depot sales price as per the proposed mechanism.
The ECC meeting presided over by Finance Minister Miftah Ismail, after approving the proposal, recommended it to the federal cabinet for final approval
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Petroleum Division proposal regarding dealers’ margin was presented to the ECC after reaching an understanding with Pakistan Petroleum Dealers Association (PPDA) by the government team with regard to increase in their margin to Rs7 per litre on MS and HSD from existing level Rs4.90 and Rs4.13, respectively.
The PPDA demand was to revise their margin to Rs6.90 litre including 15 per cent profit (effectively Rs7.94 litre) and threatened to go on a nationwide strike from July 18, 2022, if their demand was not met.
A government team of former Minister for Petroleum Shahid Khaqan Abbasi and Minister of State for Petroleum Musadik Malik initiated dialogue with the PPDA and reached an understanding to Rs7 per litre margin both on petrol and diesel.
The government also acknowledged that it is not possible for a dealer, with a daily sales volume of less than 200,000 litres, to run the business profitably on existing margins, and such daily losses become an incentive for fraudulent practices. The meeting was also informed that the existing margins were fixed in December 2021; therefore, margins may be increased.
Copyright Business Recorder, 2022
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