Refiners, fuel station owners oppose price deregulation, fear business closures

KARACHI: After Pakistan’s oil refineries, petroleum dealers also announced their decision to oppose the deregulation of fuel prices in the country on Thursday, saying the move would adversely impact their businesses and lead to their closure.

The Oil and Gas Regulatory Authority (OGRA) of Pakistan briefed the energy ministry on the possible deregulation of petroleum products on April 17, prompting five of the country’s oil refineries to write a letter in which they described it as complex and critical issue.

The deregulation proposal would empower oil marketing companies to determine fuel prices on the basis of various market forces. Local consumers getting petrol and diesel from places closer to ports and refineries would get relatively cheaper products due to the transportation cost.

“The deregulation is the death warrant for the people and the petroleum industry in the country,” Abdul Sami Khan, Chairman of Pakistan Petroleum Dealers’ Association, said at a media briefing along with other dealers at the Karachi Press Club.

“If this is imposed on us, we will be compelled to shut down our businesses.”The dealers present at the briefing said the deregulation would cause an increase in the prices of petroleum products and make it difficult to maintain the quality of the fuel.

They said giving mandate to oil marketing companies to determine oil prices would be unwise and lead to different market rates.“The government wants to shift the burden of price hike to people and get rid of the public criticism amid spiraling rates of petroleum products,” Khan added.

He said the smuggled Iranian oil had been openly sold in Pakistan, though it was not refined and damaged engines of vehicles.He also asked the government to legalize it “in the larger public interest.”

“An agreement should be made to import crude oil from Iran to end smuggling,” Khan suggested. “The crude oil bought from Iran can be refined locally.”

Malik Khuda Buksh, senior leader and founding member of the dealers’ association, said the deregulation would “create chaos in the market” since everyone would be quoting their own prices.

“Under the current mechanism, the government fixes the prices and no one can charge a single paisa more,” he explained while speaking to Arab News after the news briefing. “When the deregulation takes place, every oil marketing company will give its own price like vegetable and other product sellers, which will lead to further inflation.”

Like refiners, the petroleum dealers also warned that the deregulation of petroleum prices in Pakistan would negatively impact their business.The letter jointly written by Attock Refinery Limited, Cnergyico PK Limited, National Refinery Limited, Pakistan Refinery Limited and Pak Arab Refinery Limited said the deregulation could jeopardize nearly $6 billion of investment.

The letter maintained it was better to spend money on upgrading the refineries since it would not only result in cleaner and environment-friendly fuels of Euro-V specifications but would also help save precious foreign exchange by substantially increasing local production.