Potential fuel crisis as dealers in KP threaten strike against petroleum deregulation plan.
The Khyber Pakhtunkhwa Petroleum Dealers and Cartage Association (KPPDCA) has issued a stark warning to the government, declaring a potential fuel crisis if the government proceeds with its proposed petroleum deregulation plan. Federal Minister for Petroleum Musadik Malik recently announced plans to implement a deregulation policy that would allow oil marketing companies (OMCs) to set their fuel prices independently, a move that has sparked significant backlash from industry stakeholders.
President of KPPDCA, Gul Nawaz Afridi, voiced concerns over the deregulation policy, predicting that it would create an ‘oil mafia’ and open the door to market manipulation. Under the proposed policy, OMCs would have the authority to sell fuels at prices lower than the government’s fixed rates in an effort to gain a larger market share. However, this has raised apprehensions about the impact on local refineries and petroleum dealers, with fears of potential smuggling and hoarding practices increasing exponentially.
Afridi emphasized the critical role of the petroleum industry in the country’s economy, highlighting the substantial tax revenue generated from the sector. He warned that mismanagement in this sector could have grave repercussions and stressed that the deregulation could compromise transparency in the marketplace, leading to disruptions.
In response to these concerns, the KPPDCA announced a province-wide strike ultimatum, demanding the withdrawal of the deregulation plan by March 3. This threat follows the disapproval expressed by the Pakistan Petroleum Dealers Association (PPDA) Chairman Abdul Sami Khan, who criticized the government’s decision to move forward with deregulation without consulting major industry stakeholders.
The PPDA, with a vast network of retail outlets across Pakistan, denounced the unilateral action taken by the government and called for a review of the decision. Khan highlighted the commitments made by the petroleum minister during previous meetings, assuring stakeholders that no decisions would be made without consultation. The hasty announcement of the deregulation plan has instigated skepticism within the industry, with concerns mounting over potential ramifications, including increased influx of adulterated oil and smuggled petroleum products.
While the government argues that deregulation will promote competition among OMCs and lead to reduced fuel prices for consumers, industry insiders remain skeptical. The instability in the supply chain, coupled with the inability of domestic refineries to compete with multinational giants, poses a significant risk of disrupting the fuel market. Additionally, the lack of infrastructure in smaller cities exacerbates the challenges associated with transitioning to a deregulated market, further complicating the situation and raising uncertainties within the industry.
