The All Pakistan Petroleum Dealers Association (APPDA) on Sunday rejected the government's decision to deregulate oil prices, warning of a countrywide strike if the move is not reversed.
"The deregulation of oil pricing would lead to a foreign company taking total control of lifeline energy, which is equivalent to economic suicide," the APPDA said in a press note.
Hassan Shah, the association's spokesperson, cautioned petroleum dealers that handing control over Pakistan's precarious oil market to a powerful Saudi oil company without consulting stakeholders is not in the country's best interests.
"Deregulation would disrupt the entire supply chain from top to bottom and eventually give a strong foreign player a monopoly on the Pakistani oil market," Shah stated. He added that local refineries would have no choice but to close due to their lack of financial capacity to compete with strong foreign players.
Shah argued that it is not in the nation's best interests to eliminate competition and give one multinational company complete control.
He also highlighted that Pakistan has fuel reserves for no more than 15 days, contrasting it with countries that can store oil for months. Shah criticized the deregulation of lubricants and High Octane Blending Component (HOBC), saying it has led to a cartelizing oligopoly that has not benefitted consumers.
The Competition Commission of Pakistan, Shah pointed out, is ineffective at ensuring system transparency. Consequently, consumers will ultimately pay more rather than benefit from the free market.
He warned that the move would result in unprecedented inflation and depreciation of exchange rates, causing irreparable harm to the struggling economy.
Shah stressed that the unpredictable local oil market should not be managed by a single entity, as it would result in financial disaster. He urged the defense ministry to assess the strategic ramifications of such measures, and the government and central bank to examine how deregulation will affect inflation and currency value.
"Deregulating oil prices would ruin the nation," Shah insisted. "The government must abandon the plan."
Meanwhile, a recent meeting on February 10, 2025, addressed the issue of short upliftment, revealing that no legally binding contractual agreements exist between refineries and oil marketing companies (OMCs).
Refineries and OMCs were directed by Oil & Gas Regulatory Authority (OGRA) to enter into supply/purchase agreements to ensure commitments are honored, resulting in timely uplifting and supply of products.
According to a DSSP report dated February 10, 2025, MS and HSD sales fell short by 20% and 31%, respectively, during the period of February 1-9, 2025. This necessitates an immediate reassessment of import cargoes for both products.
In view of these issues, upcoming imports of MS and HSD are to be deferred to March 2025 or remain in bonded storages until then. The ongoing lack of rainfall in the country is expected to affect HSD sales in the coming months, coinciding with the holy month of Ramzan, during which sales typically decrease.
The APPDA calls for immediate intervention to ensure upliftment of committed volumes for both MS and HSD and restrict upcoming imports to align with stocks and sales trends.
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