Pakistan’s petroleum dealers temporarily postpone nationwide petrol pump shutdown

Pakistan Petroleum Dealers Association (PPDA) has postponed its planned nationwide strike to shut down fuel pumps for two days following successful negotiations with State Minister for Petroleum, Musadik Malik, who arrived in Karachi today (Friday) to address their concerns.

In their statement, PPDA conveyed the possibility of holding further discussions with the government after the two-day period. Initially, the association had announced the shutdown of all petrol pumps across Pakistan on July 22 at 6 pm, demanding an increase in profit margins amid the ongoing inflation crisis.

The PPDA’s concerns primarily revolve around the impact of high interest rates and inflation on their businesses, leading them to call for an increase in the dealership margin. They also raised the issue of declining sales due to the smuggling of Iranian fuel into the country.

Abdul Sami Khan, chairman of the association, informed Reuters that approximately 8,000-9,000 operators, represented by the PPDA, were prepared to shut down operations on July 22.

The supply of petrol will remain suspended until the demands put forth by the PPDA are met by the government. This decision comes at a time when Pakistan is grappling with a weakening currency and soaring inflation, with the national rate reaching 29.4% in June, down from the record high of 38% in May.

In May of the previous year, Pakistan’s oil industry had requested a Rs12/litre margin on high-speed diesel (HSD) and Mogas (petrol) for oil marketing companies (OMCs) due to the high cost of conducting business, leading to financial hardships.

The PPDA highlighted various challenges faced by the oil industry, including increased fuel prices in the international market, exchange rate fluctuations, higher interest rates resulting in inventory holding costs, credit letter confirmation charges leading to higher demurrages, and a high turnover tax of 0.5 per cent.

Although the Economic Coordination Committee (ECC) had revised the margin for HSD and Mogas to Rs6/litre during the current year based on a decision taken on October 31, 2022, the PPDA insists that this revision is insufficient and requires urgent review.