ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Thursday while approving an increase in the dealers margin fixed profit on Motor Spirit (MS) and High Speed Diesel (HSD) at Rs7 per litre.
The meeting was held under the chair of Federal Minister for Finance and Revenue Miftah Ismail at the Finance Division.
Sources said that the revision in dealer margins was proposed at Ministry of Petroleum after the Pakistan Petroleum Dealers Association (PPDA) approached the government for immediate revision of their margins due to inflation, increase in the staff salaries and utility bills.
The margins will remain effective till the crude oil price remains within the band of US $60-100/bbl, which could be revised with the approval of ECC in case the price fluctuates out of the band.
They said that the existing margin on MS is Rs4.90 per litre and Rs4.13 per litre on HSD as per petroleum sales prices issued July 16, 2022 due to which there has been an increase of 3.04% in MS and Rs2.97% HSD.
According to details, the PPDA requested to revise margins to Rs6.90/litre including 15% profit effectively Rs7.94/litre.
It may be mentioned here that the association had called for a nationwide strike from July 18, demanding that their margins be raised to 6% of the current selling price, effectively Rs13.81/litre for MS and Rs14.16/litre for HSD.
Following this, Minister of State for Petroleum and Shahid Khaqan Abbasi, on the directions of Prime Minister Shehbaz Sharif, initiated dialogue with PPDA. During negotiations, PPDA adjusted their demand and asked that margins be increased to Rs9.23/litre and Rs9.46/liter on MS and HSD, respectively, with immediate effect.
The negotiation team acknowledged that it is not possible for a dealer with daily sales volume of less than 200,000 litres to run a business profitably on existing margins and that such daily losses become an incentive for fraudulent practices. Finally, after intense negotiations, PPDA agreed to margins of Rs7/litre for both MS and HSD and on the basis of the agreement and a commitment that the revised margins will be made effective from August. This agreed margin remains below the commitment made to the dealers in November 2021, which was 4.4% of sale price.
According to a handout issued by the Finance Division, the Petroleum Division has submitted a summary on revision of OMCs and dealers margins on petroleum products.