ISLAMABAD: The All Pakistan Petroleum Dealers Association (APPDA) rejected the government’s decision to deregulate oil prices. It warned of a countrywide strike to press for a reversal of the disastrous move.

It warned that the deregulation of oil pricing would lead to a foreign company taking total control of lifeline energy, which is equivalent to economic suicide.

Hassan Shah, the association’s spokesperson, told the petroleum dealers that giving a powerful Saudi oil company complete control over Pakistan’s precarious oil market without consulting stakeholders is not in the country’s best interests.

He said the unfortunate decision of deregulation would disrupt the entire supply chain from top to bottom and eventually give a strong foreign player a monopoly on the Pakistani oil market.

He claimed that Pakistani oil refineries would have no choice but to close since they lacked the financial capacity to compete with strong foreign players.

He emphasized that it is not in the nation’s best interests to eliminate every possibility of competition and leave it up to one multinational company.

Hassan Shah said Pakistan mostly has fuel reserves for no more than 15 days; free market principles can be applied in countries that can store oil for months.

The deregulation of lubricants and HOBC (High Octane Blending Component) has not benefitted consumers in any way, but it has resulted in a cartelizing oligopoly.

Moreover, the Competition Commission of Pakistan is ineffective enough to ensure system transparency, as in Western countries. Therefore, consumers will ultimately pay more than benefit from the free market.

He warned that the action would result in unprecedented inflation and depreciation of exchange rates, irreparably harming the struggling economy.

Hassan Shah said that because the local oil market is so unpredictable, no one should have full authority to manage fuel prices as it would result in a financial disaster.

Shah argued that as oil is vital to national security, the defence ministry should assess the strategic ramifications of such measures. At the same time, the government and central bank should examine how deregulation will affect inflation and currency value.

He said policymakers should not play with the country’s energy security to please a company.

Hassan Shah claimed that the deregulation would cause oil prices to rise steadily under various guises, which would be bad for businesses and the general public.

He clarified that Western nations have embraced free-market fuel pricing after ensuring smooth supply. They keep months’ fuel on hand to manage supply chain interruptions.

On the other hand, Pakistan cannot maintain stockpiles for more than 15 days, though. There are shortages and dryouts almost every month, particularly in smaller cities. Only stringent regulation can stop refineries, OMCs, and outlets from illegally increasing fuel prices.

He noted that allowing vulnerable consumers to be taken advantage of would cause market instability and impact the cost of almost everything. The fuel demand curve exhibits nearly perfect inelasticity.

He insisted that deregulating oil prices would ruin the nation, so the government must abandon the plan.