Petroleum dealers postpone strike for two days

Karachi: The Pakistan Petroleum Dealers Association (PPDA) on Friday decided to postpone their planned strike, which aimed to close fuel pumps across the country for a two-day period.

 This decision comes after a series of negotiations with State Minister for Petroleum Musadik Malik, who visited Karachi on Friday to persuade the PPDA to call off the nationwide strike.

In their statement, the PPDA mentioned the possibility of further negotiations with the government after the initial two-day period. Previously, the PPDA had announced their intention to shut down fuel pumps nationwide from July 22nd, citing the need for an increase in profit margins due to the ongoing inflation crisis.

The association, which claims to represent more than 10,000 members, communicated their concerns about the impact of high interest rates and inflation on their businesses and requested an increase in the dealership margin. They noted a 30% decline in sales, partly attributed to the smuggling of Iranian fuel into the country.

Abdul Sami Khan, the chairman of the PPDA, revealed that around 8,000 to 9,000 operators represented by the association would be participating in the shutdown on July 22nd. The association asserted that petrol supply would remain suspended until their demands are met.

The PPDA pointed out that the margin for high-speed diesel and Mogas was revised to Rs6 per liter during the current year based on a decision taken by the Economic Coordination Committee on October 31, 2022. However, they deemed this adjustment insufficient and urgently called for a review.

Pakistan is currently grappling with a weakening currency and persistent inflation, with the national inflation rate reaching 29.4% in June, down from a record 38% in May.

Earlier in May, the oil industry in Pakistan had requested a margin of Rs12 per liter on high-speed diesel and Mogas (petrol) for oil marketing companies due to the high cost of doing business, which led to financial hardships.

In April 2022, the margin on high-speed diesel for oil marketing companies was Rs6.50 per liter, and it was Rs6 per liter on Mogas. In addition to the OMCs' margin, dealers were charging Rs7 per liter on both high-speed diesel and Mogas.

The oil industry has been facing significant challenges since the previous year, largely due to increased fuel prices in the international market, exchange rate fluctuations, elevated interest rates resulting in higher inventory holding costs, credit letter confirmation charges leading to increased demurrages, and a high turnover tax (0.5%).