Strike may partially dent petroleum sales

Munawar Hasan
Thursday, Nov 25, 2021

LAHORE: Petroleum dealers' strike is seen halting fuel supply only partially as state-owned company will operate its filling stations across the country, while outlets of rival associations are also likely to stay open, officials said on Wednesday.

The strike call announced by the petroleum dealers have met with lukewarm response from many owners of filling stations, who are not supportive of the idea of observing strike since the government has already accepted most of their demands. “One of major demands has been increase in the margin of petroleum dealers, which has been accepted in principle by the government and a summary has already been submitted to the forum of ECC (Economic Coordination Committee) of the federal cabinet for seeking approval,” said a senior official.

The upcoming meeting of ECC will review proposal in this regard and is likely to allow upward revision of dealer’s margins.

“The demand about increasing margins has been pending since long and being a genuine issue, the government gave it a patient hearing…,” a senior official told this scribe. Talking about the proposed formula, the official said Ministry of Energy had taken an informed decision over revising petroleum dealer’s margin.

“Based on a study conducted by Pakistan Institute of Development Economics (PIDE) and after factoring in impact of inflation, we have decided to compensate dealers as far as their margin is concerned,” official said and added, ”It is not an arbitrary number rather a formula-based calculation that we have done on the basis of a scientific study”.

He said the downstream petroleum industry was facing crunch time after the government’s strict control on smuggling of petroleum products from Iran. “Their income has been reduced following successful clampdown on illegal oil trade as a result of fencing. This is a harsh reality, which petroleum dealers have been denying of late,” official observed. Their income from smuggled petrol was a bonus because there was no tax on such unregulated products, he maintained.

“Now with their business in the fully regulated sector, dealers have come up with the demand of revising their margins upward and the government has already accepted their demand.”

He said the strategy of Pakistan Petroleum Dealers Association (PPDA) was flawed as they had badly failed to satisfy their own members with successive calls for strike and subsequent withdrawal of demands in the next the breath.

“There are factions of the dealers who don’t want to observe strike,” official insisted and also claimed the strike call was given for one day only. However, Jehanzaib Malik, an office bearer of PPDA said the association members strike would continue for the indefinite period and they would reopen filling stations only if their demands were met.

Malik said the proposed formula of dealer’s commission was not being raised as per their demand so they rejected the government’s move into his connection.

The PPDA official demanded of the government to increase their margin to six percent. He said that as many as 80 percent petrol pumps of the city would be closed due to the strike call. Meanwhile, consumers, according to reports pouring in from different parts of the country, are panic-buying fuel.