ISLAMABAD - Ministry of Petroleum and Natural Resources has withdrawn a summary, which it submitted with the economic coordination committee (ECC), seeking its nod to end uniform price mechanism of petrol by deregulating the margin of dealers and oil marketing companies.

Following serious reservations coupled with threats of strike calls by dealers and OMCs for indefinite period in favour of their demand regarding increase in the margin on petrol, petroleum ministry dispatched a summary to the ECC to get the margin of oil marketing companies (OMCs) and petroleum dealers deregulated in line with the developed world. However, with effect to the impact of deregulation, its was expected that per liter price of petrol would be different on different filling stations even within a city of the country besides triggering competition among OMCs and dealers. Upon this, OMCs urged the government not to change pricing mechanism because petroleum dealers with effect to this new policy would be out of control and per litre price of petrol would go up by Rs3 besides giving an end to a uniform petrol price mechanism in the country. Even, chairman oil company’s advisory council called on minister for petroleum & natural resources Shahid Khaqqan Abbasi in the premises of petroleum ministry and asked to maintain existing mechanism of oil pricing. 

“On finding serious reservations from Oil Companies Advisory Council (OCAC) during a meeting with federal petroleum minister, the petroleum ministry succumbing to the pressure of OCAC has withdrawn the summary from ECC after the instruction of petroleum minister,” an official at petroleum ministry on the condition of anonymity disclosed to The Nation on Friday. He also said that OMCs strongly opposed with petroleum ministry’s idea to end uniform petrol price mechanism during the course of this meeting. The OMCs were also found against the proposal to authorise the dealers to set the price of petrol in the country. The OMCs were of the stand that petroleum dealers with this end to uniform petrol price mechanism would be free to collect the oil price at their sweet will. They also raised with the minister that petroleum dealers would be free to set the oil price at their own sweet will with complete deregulation of the margin and if dealers increase petrol price by Rs10/liter then who would control them, and who would stop them from fleecing the consumers because OMCs in case of new mechanism of petrol price would not able to stop the dealers in future from doing so.

Under the existing mechanism, the government saves the consumer’s skin from surges in price by containing the margin on petrol at Rs1.98/liter for the OMCs and Rs2.37/liter for the dealers.

“Good news for petrol consumers is that the federal petroleum minister has advised the concerned authorities to re-draft the summary regarding the margin of dealers and OMCs,” said a senior official at petroleum ministry on condition not to be named, adding, that revised summary would be presented in near future. He also said that federal petroleum minister would soon conduct consultative meetings with all stakeholders.

When contacted Abdul Sami Khan, a senior leader of All Pakistan Petroleum Dealers Association, to get his stand over withdrawal of summary seeking deregulation of margin in petrol price, said that with existing margin dealers can not run business. The government should consider financial constraints of petroleum dealers. He was hopeful that petroleum ministry would consult the OMCs and other stakeholder prior to sending the summary to ECC for final approval.

Reliable sources in market told that OMCs would be ready to deregulate the margin in petrol price only if the government ready to increase the margin of dealers and OMCs in diesel’s price in new summary under preparation.

Interestingly, brining stability in the prices of petroleum products (POL) was the part of a laid down policy of ruling Pakistan Muslim League (Nawaz). Even, when the PML-N was on opposition benches during outgoing PPP regime then it floated a proposal to bring stability in the oil prices like of neighbouring country (India).

It is to note here that if the petroleum ministry resent the summary of deregulating the margin in per litre price of petrol to the ECC for approval then there would be serious threat of cartelisation of OMCs and dealers, and they would not be barred from charging the maximum margins on petrol.