Committee to submit proposal for revision in dealers’ margin

PPDA urges margins to be revised upward by at least 6pc of sale price

ISLAMABAD: A committee comprising members of the Pakistan Petroleum Dealers Association (PPDA), petroleum division and Oil and Gas Regulatory Authority (OGRA) will suggest a proposal for revising dealer’s margin within 10 working days, Profit learnt on Wednesday.

Well-informed sources disclosed that Minister for Energy Hammad Azhar chaired a meeting with the PPDA delegation to discuss the matter in this regard. The PPDA delegation was led by Abdul Sami Khan while secretary petroleum, chairman OGRA, member Oil OGRA, and DG Oil along with his team were in attendance.

Speaking on the occasion, the minister for Energy acknowledged the issues faced by the PPDA and stated that the margins were increased in April, however, in view of inflation, the government is ready to review the same to address the concerns of dealers.

He, however, said that the authority to revise margins rests with the Cabinet and advised to finalise a proposal based on certain benchmarks.

The PPDA chairman apprised the meeting that they have been operating petrol pumps with a meager margin, which has further deteriorated due to ongoing inflation, rupee devaluation, lease and franchise issues with Oil Marketing Companies (OMCs) and rising cost of doing business.

He said that margins are fixed in absolute terms and have been increased by a few paisas based on CPI.  Therefore, he said, sustainable operation of pumps is no more viable which may lead to closure if margins are not revised upward by at least 6 per cent of the sale price.

Present on the occasion, secretary petroleum informed the meeting that Pakistan Institute of Development Economics (PIDE) has already been engaged to carry out a study for revision of OMCs and Dealers margins. PIDE presented its findings to the ministry, however, they have been advised to come up with a robust model of cost and revenue centers of OMCs and Dealers and work out the level of optimum margins which can ensure risk adjusted returns. PIDE is about to finalize its study and findings will be shared with the committee also. Resultantly, chairman PPDA nominated seven members and the government side will be led by Secretary Petroleum and assisted by Chairman OGRA, DG (Oil) and PIDE team head.

It is pertinent to mention here that the meeting agreed that the committee will resolve the issue of margins on a long term basis. However, the outcome will be converted into a summary for the federal cabinet’s economic coordination committee (ECC).

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Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected]

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