The Pakistan Petroleum Dealers Association (PPDA) announced a nationwide closure of petrol stations starting July 5, following failed negotiations with both provincial and federal governments. The shutdown, set to begin at 6 AM, could extend indefinitely until the PPDA’s demands are met.
Deadlock in negotiations
PPDA Chairman Abdul Sami Khan, as reported by Dawn, revealed that despite exhaustive talks with numerous government officials — including unnamed stakeholders, the finance minister, the chairman of the Federal Board of Revenue (FBR), the Oil and Gas Regulatory Authority (OGRA) chief, the petroleum secretary, and representatives from the Oil Marketing Companies’ (OMC) advisory council — no resolution was reached.
“They asked us to call off the strike and promised to resolve the issue, but we cannot postpone the strike on mere assurances,” Khan asserted. He emphasised that further discussions with the government would be futile until the contentious turnover tax is withdrawn, labelling the tax as both “cruel” and “unconstitutional.”
Impending shutdown and impact
The strike will see over 13,000 petrol stations across Pakistan cease operations. Khan advised station owners and operators to maintain their stocks for July 4, anticipating significant disruptions starting the next day. The PPDA’s primary grievance centers on the imposition of a 0.5% advance turnover tax, which they argue constitutes double taxation. According to the PPDA, outlets already pay an advance fixed withholding tax of Rs1.4 per liter (approximately 12% of dealer commission) as final income tax.
Government response
In response to the looming strike, the petroleum division has established a monitoring cell to oversee fuel supply and coordinate with stakeholders. This cell includes representatives from OMCs, OGRA, and the petroleum division, with focal persons appointed to ensure the cell’s effectiveness.
The petroleum division has also reiterated directives to OMCs to maintain sufficient stocks of petroleum products at their company-owned and operated sites to mitigate potential supply disruptions. Despite these measures, the PPDA remains resolute in its stance, driven by what they see as an unfair fiscal burden imposed by the recent budget.
Legislative hurdles
The FBR chairman had previously assured the PPDA of the turnover tax’s withdrawal, but this process is complicated by legislative requirements. The tax, instituted through the Finance Act 2024-25, requires parliamentary action to be reversed — a process that the petroleum secretary acknowledged as lengthy and intricate.
As the situation stands, Pakistan faces a significant fuel supply crisis beginning July 5, with the potential for severe economic repercussions if the strike continues. The PPDA’s firm stance and the government’s legislative constraints suggest a challenging path ahead for both sides.
