ISLAMABAD: The Petroleum Dealer Association called off the strike after an agreement reached between the Petroleum Division and the association regarding upward revision of the dealers’ margins. Both sides agreed that the dealer margin on petrol will be increased by Rs 0.99 per litre while on HSD it will be hiked by Rs 0.83 per litre.
Instead of increasing the dealer margin to six percent of the prices of petroleum products (Approximately hike of Rs 5 per litre of Petrol) as demanded by Pakistan Petroleum Dealers Association, the government has agreed to raise it only by Rs 0.99 per litre on Petrol.
During day time the Dealers Association was not ready to even move an inch and was stuck to its demand of six percent increase in margin. Minister for Energy Hammad Azhar has however made it clear that the illegitimate demands of the Pakistan Petroleum Dealers Association (PPDA) for a substantial increase in their margin will not be accepted. In a statement, Energy Minister Hamad Azhar said that some elements were pushing the government to increase the profit margin by Rs 9 per litre on the sale of petroleum products. He stated that government could not hike margins by Rs 9 per litre to appease few oil marketing companies.
The government is aware of the problems of the owners of petrol pumps, the minister said, adding, their legitimate demands will be accepted by the government. A summary relating to the increase in the profit margin of petroleum dealers, he said had already been moved to the Economic Coordination Committee (ECC) and the ECC would decide the matter in its next meeting.
As per the agreement signed by both the parties late Thursday night, it is stated that “In the background of revision of margins of petroleum products, multiple consultation sessions were held with Pakistan Petroleum Dealers Association which included participation of key OMCs, OCAC, and other leading players.
All stakeholders appreciated Petroleum Division’s proposal for enhancement of 99 paisas in the existing margin of Petrol i.e., Rs. 3.91/liter. The proposal for 25% increase in the margin of dealers will cover all delays in the revision of margin in the past and would also help dealers in mitigating the impact of inflation. Petroleum Division has assured that it will put all its endeavours to defend the said proposal of 25% increase in the existing margin before the Economic Coordination Committee of the Cabinet and the Federal Cabinet so that this historic relief to the Petroleum Dealers in the shape of sizeable enhancement in their margins becomes a reality.
“All parties clearly understand that passing on the extra costs to the general public/ consumers of petroleum products is not viable. However, Petroleum Division assured the Dealers Association that after 6 months (during June, 2022) margins will be readjusted according to the level of inflation prevalent at the time.
The Dealers Association suggested that in the subsequent adjustment (during June, 2022) the margins may be fixed in percentage terms and Petroleum Division will put its best efforts to obtain approval of the competent forum, for revision of dealers’ margin up to 4.40 percent of the selling price.
This arrangement of enhancing margin presently by 25% and subsequent readjustment after 6 months will ensure safety and security of the business of the Petroleum Dealers without passing the extra burden to the general public. Both parties agreed to work mutually for the betterment of the country, the agreement said.
On the call of PPDA countrywide strike started from Thursday morning till an indefinite period which resulted in panic buying during the early hours Thursday. Long queues, brawls and traffic jams were reported during the morning at various petrol pump stations across the country. However by evening thing started coming to normal as petrol pumps across the country started opening. The main reason for the failure of the strike was non participation of oil tankers associations, opening of the outlets operated by big OMCs and availability of CNG.
As per the summary moved by Petroleum Division to the ECC for increase in margins of Oil Marketing Companies (OMCs) and Petroleum Dealers by up to 25.20 %, in line with the study approved by PIDE.
PIDE has proposed different options to raise margins of OMCs and dealers. In first option, PIDE has recommended that 50 percent of margins be linked to CPI and increase the margins based on CPI annually. The other 50 percent component of the margins should be revised every two years based on an analysis of data obtained from the petroleum dealers and OMCs. The second option is to revise the margins of petrol and high speed diesel as percentage of petroleum products prices excluding the margins. In another option, PIDE has recommended to deregulate Pakistan downstream industry.
In light of this, petroleum division has proposed economic decision making body to increase OMCs and dealers margins for petrol and high speed diesel by 23.32 percent and 25.20 percent to take effect in upcoming revision in oil prices. Minister urged the owners of petrol pumps to realise the plight of the masses and review their decision.
The Petroleum Division has recommended the margin of petrol up to Rs4.90 per litre against the existing Rs3.91 per litre. In the case of high-speed diesel (HSD), margin has proposed to increase from Rs3.30 to Rs4.13 per litre.
Copyright Business Recorder, 2021