Most Pakistani petrol pumps have workers holding a bundle of cash. The tale isn’t about unfair wages but how fuel pumps earn money.
Several factors influence the price of fuel in the country. The earnings received by a dealer are known as merchant margins (or pump margins in this context). Previously, percentages were utilized, but now they are fixed per liter.
What Is the Income From Petrol Pump Businesses in Pakistan?
Pakistanis have been queuing for fuel at petrol stations since the pumps were on strike. A company-owned pump was the sole means to receive Petrol; there were only a few dealer-owned pumps. Karachi, for example, only 20 pumps are operated by the firm. Dealers or strikes manage the rest.
The Pakistan Petroleum Dealers Association (PPDA) has declared a strike to demand a more significant margin on petroleum product sales, which will begin on Thursday and last indefinitely.
Due to the petrol strike, the government, according to the minister, will not accept specific petroleum merchants’ “illegitimate demands.”
“The government would not hike petroleum prices by Rs9 per liter just to appease a few corporations,” he remarked.
Let’s Talk About Some Factual Stats Related to Petroleum
At petrol stations, petrol costs Rs3.91 per litre, while diesel costs Rs3.30. The Pakistan Petroleum Dealers Association (PPDA) requested that the 2.75% per liter earned by petrol outlets be raised to 6%. If this demand is met, petrol stations will make Rs8.75 per litre, and diesel stations will earn Rs8.5 per liter.
Because of agreements with merchants, petrol will now be paid at Rs 4.90 per liter. This equates to a 99-paisa improvement in fuel margin and high-speed diesel margin.
“The proposed 25% margin increase will cover all previous delays in margin adjustments and reduce the burden of inflation on dealers,” said the Petroleum Division.
In 2016, the ECC decided that margins would be revised yearly by an average CPI Consumer Price Index percentage. The regulation for this average change remained unchanged in 2019. The margin has only changed four times in the last five years for petrol and three times for diesel.
Whenever strike action has been risked, petrol’s most recent margin revision occurred in April 2021, 9 months after the last revision. For the last few months, the administration has been delaying the adjustment by saying that the PIDE report would be used to revise margins. Even though the study is complete, the government has yet to be willing to alter rates. Aside from that, given the impending fuel crisis in June 2020, the government’s relationship with petrol pumps might be more beneficial. Although inflation remains a problem, and fuel prices are growing globally, the government believes it must respond responsibly and appropriately.
Petrol Price Components
The Petrol price components are combined to calculate ex-depot pricing at stations. The base price is either the import or the ex-refinery price, depending on whether the oil is imported or produced domestically. Then there are retailer and freight costs and inland freight equalization margins. OMC profit margins (the amount of money earned by company-owned pumps) and dealer commissions are examples (of what petrol pump owners make). Taxes, such as the standard sales tax and the petroleum development levy, are levied at the end of the procedure.
The cost of transporting crude oil from the source to the refinery is the next significant contributor to a refinery’s inland freight equalization margin (IEFM). Transporting the finished product to other depots is also included in the price. Internal transportation costs are included in this category.
The following key addition is the inland freight equalization margin (IEFM) of a refinery, which is the cost of carrying crude oil from the source to the refinery. The cost of transporting the finished product to other depots is also included. This category includes transportation costs within the company.
Without these subsidies, petrol costs in Karachi would be lower. They would be higher in practically every other section of the country, including Balochistan and Gilgit-Baltistan, at the same time.
JINN Petroleum has settled two depots to fulfill the basic petroleum requirements. One is in Sahiwal, Punjab, and the other in Hub, Balochistan. The main focus is developing a solid retail segment that focuses on developing petrol pumps at critical locations and adding valued business partners. The journey has already started with establishing a retail network in different provinces and parts of Pakistan.
GSTs & Petroleum Industry
We finally come to taxes because the general sales tax (GST) and the petroleum development levy are added to the Petrol station price after all these tools. After these instruments, the general sales tax (GST) and the petroleum development levy are applied to the petrol station pricing.
The GST is fixed at 0% to alleviate growing fuel prices. It was previously set at 17%. Because it’s a ratio, it fluctuates with the cost of gasoline—the government levies a duty based on a rupee value per liter. Nonetheless, the premium is fixed per liter.
It is intended to counteract increases in import prices and fuel expenses to stabilize petroleum prices. During an election year, however, the levy is often used to alleviate customers or produce additional revenue. The one-time fee of Rs15 per liter has now been increased to Rs30 per liter.
When it wants to ease customers, the government could maintain a fee of zero rupees or a low number. As a result, if all expenditures are considered, the government may raise fuel prices to Rs30.
The government could keep a levy of zero rupees or a low number when it wants to relieve consumers. Therefore, the government could increase fuel prices to Rs30 after all the costs are added.
There are two kinds of petrol stations: company-owned and dealer-owned.
A dealer-owned petrol pump is created when an individual obtains a “franchise” of a petrol pump, completes all legal processes, and sells fuel for an OMC. Dealership margins allow them to profit.
How much a pump earns is determined by the amount of fuel sold. Pumps also make money by selling lubricants and providing other services, including tire puncture stations, car wash facilities, and stores.
How Petrol Pumps Earn– Know the secret!
Your earnings are specified by the type and quantity of stations you operate and their location. Still, you can expect a potential annual income of PKR 2,500,000 to PKR 3,500,000 (for a single site) from year one, with the prospect of other revenues if you exceed expectations.” JINN petroleum makes petrol pump investment in Pakistan much easy.
While these figures are not guaranteed, the company you contract will provide gasoline and training if you establish a fuel station. You will earn your margin and possibly a bonus or remuneration if you exceed sales targets in exchange for your investment and work. Even though fuel prices contribute to inflation, inflation and the cost of doing business for pump owners have increased.
If you are looking to invest in petrol pumps, JPPL is the safest choice to invest in. Together, Let’s make a well-developed