Petroleum dealers in Pakistan threaten nationwide strike from Saturday after govt fails to increase profit margins

KARACHI: The petroleum dealers in cash-strapped Pakistan have threatened to hold a nationwide strike from Saturday as they are dissatisfied with Shehbaz Sharif-led government on its failure to increase their profit margins, a media report said on Friday.

Speaking at a press conference here, Pakistan Petroleum Dealers Association (PPDA) chairman Samiullah Khan, expressed their frustration over the government's inability to raise their profit margin to 5 per cent on the sale of two major petroleum products, The Express Tribune newspaper reported.

Currently fixed at Rs 6 per litre (2.4 per cent), the 5 per cent margin would amount to over Rs 12 per litre, given the prevailing petrol and diesel prices of Rs 253/litre and Rs 253.50/litre, respectively, the report said.

The latest fortnightly work for determining petroleum product prices, effective from July 16, indicated that the dealers were receiving Rs 7/litre instead of the claimed Rs 6/litre.

However, this Rs 7 margin falls significantly short of the 5 per cent demand the dealers have been persistently making, a promise that was made by the Shehbaz government after assuming power in April 2022.

A dealer later told the newspaper that minister of state (petroleum division) Musadik Malik had reached out to the association's chairman, pledging to hold a meeting with them in Karachi on Saturday.

However, if no meeting occurs or there is no satisfactory outcome, the strike will continue, except on the two days of Muharram 9-10 (falling on July 28-29) to ensure that the religious event is not affected.

The rising cost of doing business has offset the profit margins, leaving many dealers with negative margins.

The government's delay in fulfilling the promise has left the dealers in a precarious position, with the parliamentary term ending next month, the report said.

They fear that they may be left in limbo for another three to six months during the caretaker setup until the next elected government takes office.

Another challenge for the dealers is posed by the presence of Iranian smuggled products, especially diesel, in local markets, which has reduced sales by around 30 per cent, the report said.

With current margins, it has become nearly impossible for filling stations to operate efficiently, the dealers say.

The PPDA chairman said that there are 12,000 filling stations nationwide, with around 10,000 of them being members of the association.

He also pointed out the alarming inflation rate, reaching a six-decade high of 38 per cent in May, with the annual average inflation rising to 29 per cent in FY23 compared to 11 per cent in FY22.

Power and gas tariffs have increased, and the benchmark KIBOR for bank borrowing reached a new all-time high at 23 per cent.

He noted that the government had initially promised 5 per cent margins in 1999, gradually reducing it to 4 per cent by 2004, and eventually fixing it at Rs6 (2.4 per cent) during its outgoing tenure, the report added.