Tag: petroleum dealers

  • ECC approves margin hike for petroleum dealers and OMCs starting September 15

    ECC approves margin hike for petroleum dealers and OMCs starting September 15

    The Economic Coordination Committee (ECC) of the Cabinet, in a significant move, has given its nod to incrementally raise the margins of petroleum dealers and oil marketing companies (OMCs) starting from September 15. This decision followed a detailed review of a proposal submitted by the Ministry of Energy (Petroleum Division).

    The ECC’s decision entails an enhancement of the margins for petroleum dealers handling Motor Spirit (MS) and High-Speed Diesel (HSD) by Rs1.64 per litre. This increment will be implemented through four fortnightly installments of Rs0.41 per litre, effective from September 15, 2023.

    Furthermore, OMCs will also see their margins on MS and HSD increase by Rs1.87 per litre. This increment will likewise be phased in over four installments, each amounting to Rs0.47 per litre, also commencing on September 15, 2023.

    To ensure transparency and efficiency in determining these margins, the ECC has entrusted the responsibility to the Oil and Gas Regulatory Authority (Ogra). Ogra is expected to develop a systematic mechanism for margin calculation, taking into account the operational costs incurred by OMCs and dealers, with specific reference to Pakistan State Oil (PSO).

    In a separate development, the ECC meeting addressed the financial challenges faced by Pakistan International Airlines (PIA). The national carrier had requested a provision of Rs22.9 billion, as well as the deferment of Rs1.3 billion per month to the Federal Bureau of Revenue (FBR), along with loans and markup amounts until the finalization of the restructuring plan.

    However, the ECC decided to reject PIA’s request. It was also agreed upon that the Finance Division and the State Bank of Pakistan would extend their support to PIA once a concrete restructuring plan is developed and submitted to the committee’s satisfaction.

    Additionally, the ECC approved a Technical Supplementary Grant of Rs40 billion to fund various pre-approved projects for defense services and to cover subsidies and miscellaneous expenditures during the fiscal year 2023-24. This funding will be disbursed on a case-by-case basis, aligning with the current budgetary provisions.

    According to The News, The ECC’s decisions reflect the government’s commitment to addressing the financial dynamics of the petroleum sector and the ongoing restructuring efforts within PIA, while maintaining fiscal prudence in budget allocations.

    This latest development is expected to have a significant impact on the energy sector and the national carrier, as stakeholders closely monitor the implementation of the ECC’s decisions in the coming fortnights.

  • Petroleum dealers’ strike averted: Govt approves Rs1.64 per litre profit margin increase

    Petroleum dealers’ strike averted: Govt approves Rs1.64 per litre profit margin increase

    The government has successfully reached an agreement with the Pakistan Petroleum Dealers Association (PPDA) to avert the strike they had threatened last week. After extensive negotiations, the government agreed to increase the profit margin on petroleum products for dealers by Rs1.64 per litre.

    Chairman of the PPDA, Abdul Sami Khan, made the announcement regarding the deal. Initially, the government had proposed a lower increase of Rs1.64 per litre, but the dealers, who had originally sought a higher increase of Rs5 per litre, resisted, deeming it insufficient to cover their rising business costs. Eventually, they accepted the government’s offer.

    The new profit margin for dealers will be implemented in four phases. Every fortnight, it will be raised by Rs0.41 per litre, culminating in a full raise of Rs1.6 per litre within two months. This will bring the dealers’ margin to Rs7.6 per litre, up from the current Rs6 per litre.

    The decision to strike was initially announced by the PPDA in response to the ongoing inflation crisis. The association stated that increasing interest rates and inflation had severely impacted their businesses and demanded a raise in the dealership margin to cope with the challenges they were facing. They also pointed out a decline in sales by 30%, partly due to the smuggling of Iranian fuel into the country.

    Read more: Petroleum dealers and Minister set to meet today to resolve profit margin dispute

    However, the strike was deferred for two days after the PPDA members engaged in discussions with the State Minister for Petroleum, Musadik Malik. The minister’s visit to Karachi was aimed at convincing the PPDA to call off the nationwide strike.

    In summary, following negotiations with the government, the Pakistan Petroleum Dealers Association has agreed to suspend their planned strike, and the government will increase their profit margin on petroleum products in a phased manner over the next two months.

  • Petroleum dealers and Minister set to meet today to resolve profit margin dispute

    Petroleum dealers and Minister set to meet today to resolve profit margin dispute

    According to media reports, the Petroleum dealers are scheduled to hold a meeting today with Minister of State for Petroleum, Musadik Malik, in an effort to reach an agreement on increasing profit margins.

    In response to their demands, the Petroleum dealers have been engaged in protests and have issued threats of a countrywide shutdown of stations if their requests are not met.

    However, following a meeting between officials of the Pakistan Petroleum Dealers Association (PPDA) and the Minister on Friday, the strike has been temporarily postponed, pending a resolution regarding the increment of the dealers’ profit margin.

    A spokesperson from the PPDA clarified that no petrol stations will be closed until after the meeting, and any further course of action will be determined based on the outcome of the meeting.

    Currently, the profit margin for dealers stands at 2.4 per cent or Rs6 per liter, and they are seeking a revision to 5 per cent, which amounts to nearly double the current margin.

    According to Mettis Global, the PPDA Chairman, Abdul Sami Khan, pointed out that the consumer price index has escalated by 38 per cent, while electricity and other utility rates have also spiked, primarily due to the increase in the Kibor rate.

    He further highlighted that a decision was made in 1999, stating that dealers would receive a 5 per cent margin on oil products. However, the government fixed the margin at Rs6 per liter, resulting in a mere 2.4 per cent profit for dealers, which has left them dissatisfied.

  • Petroleum dealers demand commission hike, threaten countrywide petrol pump shutdown

    Petroleum dealers demand commission hike, threaten countrywide petrol pump shutdown

    The petroleum dealers have issued a formal threat to initiate a nationwide strike in their pursuit of an increase in commission rates from the government.

    The petroleum dealers have expressed their intention to cease operations at petrol pumps throughout the entire country, while simultaneously demanding that the government reinstate a 5 per cent profit margin.

    Abdul Sami Khan, Chairman of the Pakistan Petroleum Dealers Association (PPDA), emphasised that they are unable to sustain the sale of petroleum products at the current commission rates for dealers.

    Khan further announced the urgent convening of a meeting in Lahore on July 12th, with the purpose of addressing these concerns. He asserted that the sale of petroleum products has experienced a significant decline of 40 per cent due to the prevalence of smuggled petrol and diesel in the nation.

    In the previous year, the dealers had demanded that the dealer’s margin be fixed at 6 per cent and had issued a similar nationwide strike threat.

    Earlier, the oil marketing companies (OMCs) had written a formal letter to the Oil Companies Advisory Committee (OCAC), requesting the federal government to establish OMC’s margin for petrol and high-speed diesel (HSD) at Rs12 per litre.

    It has come to light that the dealers’ commission had experienced a notable increase of over 25 per cent to Rs7 per litre in 2022. According to ARY News, this increase coincided with the adjustment of OMC’s margins from Rs3 and Rs3.68 per litre on petrol and HSD, respectively, to Rs6 per litre in November 2022.