Profit margin: protesting fuel retailers not optimistic about prospects of talks

KARACHI: The country’s fuel oil sellers on Tuesday doubted over a success of their meeting with the federal energy minister on the issue of commission, which is due on Nov 3 (today) in Islamabad and warned that the talk’s failure will lead to closures of petrol pumps as their owners are not interested in selling petrol on ‘low’ returns.

The Pakistan Petroleum Dealers Association sticks to its demand of a six percent margin on sales of fuel oil to customers but making attempts to have the government adjust the commission in its levies so that the financial burden could not pass on to the “poor” buyers.

The association; however, retracted from its stance of a strike on November 5 but softened it to a “closure” of their pumps.

“We (PPDA) have received a letter call from the ministry of petroleum for a meeting on Nov 3 (Wednesday) in Islamabad to negotiate on the commission,” Chairman PPDA, Abdul Sami Khan told a joint news conference held at Karachi Press Club’s auditorium, adding but we will not accept the government’s terms.

The petrol dealers are in a financial “tatters” on high cost of business and low margin of returns, he said that the government guarantees only two percent of margin on sales of the fuel oil in the face of rising electricity tariffs.

“We demand of the government to cancel our petrol pumps licenses,” he said, claiming that “nearly 50 percent of the petrol pumps will close down permanently with license cancellation as no one will reapply for acquisition”.

Talks’ failure with Hammad Azhar, Federal Energy Minister, who also holds a petroleum ministry’s portfolio, will lead to a closure of petrol pumps from Nov 5 (Friday) across the country, he said and apologized to the nation for the inconveniences in advance. He said that the petrol selling has become a hard business for them to carry on with continuing financial “losses”.

“Immediate increase of six percent on ex-depot price in dealers’ margin for HSD and MS without burdening common people and without increasing prices of petroleum products, absorbing dealers’ margin increase by reducing Sales Tax and PDL,” he demanded.

This government, he said, has been holding up the issue of margin on petrol sales leaving the dealers without an option rather to seal off their businesses. He said that the PPDA has twice refused previously to talk with the government but this time it is going to reiterate its demand of six percent from existing two percent margin with an increase on a yearly basis.

“Not this government but all previous governments have ‘deceived’ us on margin issue,” Sami, who was helped out by Malik Khuda Bukhs after reporters hurled incessant questions at him, saying that the Gen. (retd.) Pervez Musharraf’s government had promised them that it will scale up the margin on fuel oil sales to four percent in 2004 and five percent in 2005.

“This commitment was in writing,” they said, adding that the commission instead was reduced subsequently to 3.5 percent and then continued falling off to 2.5 percent at present. They said that the margin, which is Rs2 on a litre, generates only up to 50 Paisas to the dealers.

Sami assured that association distances itself from foul tactics of the pumps operators deceiving the oil buyers by low fillings, saying that it is a general trend of the society to swindle the customers and there are no exceptions. However, it assured that on complaints found genuine against any of the pumps will be closed down as punishment.

Representatives of the PPDA will participate in the meeting from all four provinces, he said and rejected that any division in the association will mar the petrol pumps closures. However, he softened his stance that “if the government assures him of increasing the margin level to six percent in phases then the dealers may not go for closure of their pumps”.

Copyright Business Recorder, 2021