After the Pakistan Petroleum Dealers Association (PPDA) requested an immediate modification of their margins due to inflation, an increase in staff pay, and utility costs, the Ministry of Petroleum proposed the revision in dealer margins.
By increasing their sales margin by Rs. 7 per litre, the ECC meeting, chaired over by Finance Minister Miftah Ismail, agreed to the demands of oil dealers OMCs.
In response to rising business costs and inflation, the OMCs and petroleum dealers have been requesting an increase in their sales and distribution margins of about 6%.
On the orders of Prime Minister Shehbaz Sharif, Shahid Khaqan Abbasi, Minister of State for Petroleum, started communication with PPDA.
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In the course of the negotiations, the PPDA changed their demand and requested that the margins be raised to Rs9.23/liter for MS and HSD, respectively, and Rs9.46/liter with immediate effect.
The negotiating side admitted that a dealer with daily sales volume of less than 200,000 litres is unable to operate a profitable business on current margins, and that such daily losses encourage deceptive practices.
Pakistan OMC sales are down 26% MoM in July 2022, lowest after Feb 2021. HSD & MS sales down 38% and 15%, respectively. #OMCsales pic.twitter.com/1yEZudfer2
— Topline Securities (@toplinesec) August 1, 2022
In the end, PPDA accepted margins of Rs 7 per litre for both Motor Spirit (MS) and High-Speed Diesel (HSD), with the understanding that the revised margins would take effect in August. This agreed margin is still less than the 4.4 percent of the price pledge provided to the dealers in November 2021.