If you’ve been to a petrol pump in Pakistan chances are that you’ve seen a lad working at the pump holding a large wad of cash. As a kid you probably thought that the guy is rich, as an adult you come to realize, the guy probably earns the equivalent of 5 litres of fuel (at current prices) in a day – basically peanuts. But this story isn’t about unfair wages, it has more to do with how fuel pumps earn money.
There are various components that help determine the price of fuel in the country. Dealership margins are the margins a dealer (a pump owner in this case) gets. These used to be in the form of percentages but have been fixed per liter.
The past week, thousands of Pakistanis were stuck in line at fuel pumps in hopes of getting fuel. They couldn’t because the petrol pumps were on strike. The only way one could get fuel was if they managed to find a company operated pump,
which are a tiny fraction compared to dealer owned pumps. For an understanding of this, let’s take Karachi as an example where there are only 20 company operated (only PSO and Shell, Gas and Oil Pakistan Ltd (GO), Hascol Petroleum Ltd) pumps, whereas the approximate remaining 480 are dealer operated or belonging to companies that participated in the strike.
