Petroleum dealers threaten shutting down stations in protest

PPDA plans strike after Eid over low margins, rise in business costs

The Pakistan Petroleum Dealers Association (PPDA) on Sunday announced that it will be going on a nationwide strike as of July 18, shutting down petrol stations all over the country, in the wake of rising oil prices. 

The PPDA chairman Abdul Sami Khan, in a statement, said that it was not possible to continue petroleum sales at the current rate. He announced that petrol pumps will remain closed following July 18 until the margin on petroleum products is increased.

The statement was issued after an emergency meeting was called by the PPDA where it was decided that a minimum commission margin of six per cent was required for the stations to continue operating.

The officials lamented that the current margin of 3.5 per cent was not sustainable.

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Yesterday, it was also reported that the demand for petrol and diesel had dropped 12% and 16% respectively in June 2022 compared to the previous month, snapping a long uptrend in sales of petroleum products in the wake of the withdrawal of subsidies and imposition of taxes.

Last year in November, the previous Pakistan Tehreek-e-Insaf (PTI) government had given in to the association's demands after a nationwide strike. However, instead of meeting the PPDA's demand of six per cent margin – approximately Rs5 per litre on petrol, it was decided that the margin on petrol will be increased by 99 paisas per litre and 83 paisas per litre on high-speed diesel (HSD). Similarly, the margin on HSD was increased to Rs4.13 per litre from the current Rs3.30.

It may be noted that in June this year, a major oil industry lobby had warned of an impending breakdown in the energy supply chain as companies are facing a financial crisis following the refusal of international banks to accept Letters of Credit (LCs) opened by Pakistani banks.

In an SOS call, Oil Companies Advisory Council (OCAC) Chairman Waqar Irshad Siddiqui revealed that the oil industry had come under a financial strain, raising the spectre of breakdown in the country’s energy supply chain.

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Furthermore, on June 30, the coalition government dropped another oil bomb as it increased the prices by up to Rs18.83 per litre on account of the petroleum levy on these products.

Earlier, the government had been charging zero petroleum levy and general sales tax on petroleum products to absorb the impact of the hike in global oil prices and depreciation of the rupee against the dollar.