Petroleum dealers oppose PM’s fuel subsidy scheme over payment concerns

The Pakistan Petroleum Dealers Association (PPDA) has refused to become a part of the government’s fuel subsidy scheme until the mechanism for reimbursing the subsidised amount is clarified, warning that petrol stations could be shut down if the scheme is imposed on dealers.

PPDA Chairman Malik Khuda Bakhsh expressed reservations about the federal government’s fuel relief programme at a press conference, saying that the fuel relief initiative is welcome but dealers have concerns over its implementation. He said the government is yet to clarify who would reimburse dealers for the subsidised fuel.

The association demanded that the relief amount be paid directly to consumers and that the mechanism used for an earlier fuel subsidy programme be considered.

Khuda Bakhsh called for implementation of the scheme to be halted until the dealers’ concerns are addressed. He also demanded that petroleum prices be revised once a month instead of more frequently, that the government consult dealers on the relief programme and that dealers’ margin be increased to 8%.

He said the association has been trying to contact the government for three days but had received no response. On fuel supplies, Khuda Bakhsh said that bringing petroleum products to Pakistan through the Red Sea was increasing transportation costs. He claimed the shipment of Saudi oil through the route was now taking more than 23 days, compared with around a week for fuel arriving from Gulf countries through the Strait of Hormuz.

Rejecting the proposed “smart lockdown”, he said petroleum dealers could not afford measures that would disrupt business activity. He said such restrictions might have been understandable during the Covid-19 pandemic, but a smart lockdown was not a solution to the current fuel price crisis.

According to the PPDA, dealers’ capital was already under pressure because of inflation, while the subsidy scheme could leave billions of rupees tied up. The association questioned who would compensate dealers for such losses.

It said billions of rupees in payments owed by oil marketing companies were already outstanding and warned that the proposed mechanism could put around 14,000 petroleum dealers across the country under further financial strain.