Meanwhile, government has invited petroleum dealers for talks on controversial profit/margin on gasoline today. A spokesman of the Ministry of Petroleum and Natural Resources on Thursday said that the dealers' point of view would be heard on profit/ margin on gasoline to avoid any strike. He said OMCs and dealers margins were fixed at percentage on sale price since 1997 and they have not been changed.
He added that OMCs margin was in the range of 0.5 percent on fixed sale price. Subsequently, realising low margin of OMCs and to encourage investment in this area the government had increased it by 1percent in 1993 and again 1percent in 1995. Therefore, he maintained that margin was finally fixed at 3.5percent for OMCs and 4percent for dealers in 2002 including the government levies and taxes.
The Spokesman said oil prices in international market increased exorbitantly during the past couple of years and thus, the margin being percentage of sale price increased substantially in terms of rupees per litre.
The government while capping the prices of petroleum products to provide relief to the consumers also decided to rationalise the calculated margins of OMCs and dealers. In fact, no change has been made in the margins of OMCs dealers, which are at the level of 3.5percent and 4percent respectively.
However, for the purpose of calculation, Petroleum Development Levy (PDL) has been excluded from the working. He said the dealers association should come and negotiate the issue with the officials to avoid any problem in supply of gasoline to the consumers.
Earlier Pakistan Petroleum Dealers Association (PPDA) had announced to disconnect gasoline sales from Friday for indefinite period in protest against the reduction of profit margin of 39 paisa on petroleum products by government.
Addressing a press conference here Abdul Sami Khan, Chairman, PPDA said that petroleum dealers' commission already has cut by 40 paisa in August 2006, during last one year petroleum dealers commission has cut off by 79 paisa," he added.
"We had decided to go on strike after the 40 paisa slash, however the protest postponed on the request of Ahmed Waqar, Secretary Petroleum," he said.
Secretary Petroleum promised to reinstate the commission within a month but till the promise was not fulfilled, while they have further slashed petroleum dealers' profit margin by 39 paisa more on 25 August 2007, Sami said.
He said a committee formed by the government in 1994 had announced 5 percent commission for dealers while 4 percent for the Oil Marketing Companies (OMCs) but that announcement could not be materialised and subsequently turned into service charges and remained in place till 2002.
The operational expenses of petrol pumps have tremendously increased due to electricity bill, employee salaries, social security, and many others he said, adding that CNG stations and illegal Depots (Dabba stations) had badly effected the petrol pumps business.
He said that reduction in profit margin on gasoline was unnecessary and the government should review its policy of discouraging dealers, who were interested in investing funds for the development of petroleum sector. If dealer's commission was not restored they would go for wrong practices and illegal means violating the rule of justice, he feared.
He said that dealers were being compelled to shutdown their stations by reducing commission currently. "If we were not bound to shutdown petrol pumps before ending the leasing period, we will shut down earlier", he added.
Responding to a query he accepted that dealers had gained erroneous profits on the government revenues but were still bent on forcing government to reinstate 39paisa commission on retail price basis.
It may be mentioned here that despite cutting down profit margin of dealers and OMCs on petroleum products by 40paisa and 39paisa, respectively, the government was not likely to apply the same formula on itself by cutting down petroleum development levy (PDL) besides reducing fuel rates to facilitate consumers.
The previous formula had created a positive impact on the growth of petroleum sector, which resulted in more than Rs 100 billion investment in the industry besides improving quality of petroleum products. Sami further said that strike would continue till the restoration of the commission and the dealers were disconnecting the CNG supply on Sunday.