LAHORE: The business community has reacted strongly to the sharp escalation in the prices of petroleum products of Rs 4.27 to Rs 5.97 per litre and has called upon the federal government to reconsider its decision, given the serious consequences it holds for both industry and trade.
Business leaders from the provincial capital have said that the huge increase in the prices of petrol and diesel would greatly augment inflation and have a knock-on effect on the cost of all economic activity. Inflation is currently hovering around 16 percent. Lahore Chamber of Commerce and Industry (LCCI) President Shahzad Ali Malik expressed his fear that the marked rise in the prices of petroleum products in tandem with the proposed two percent hike in the power tariff would almost certainly ramp up the rate of inflation.
An exorbitant increase of 6.8 to 8.9 percent would be a major setback, not only to commerce, industry and agriculture, but also to the government. Malik was of the view that the decision for the increase was ill-conceived. “At a time when industry is suffering from a massive shortfall in energy and the high cost of doing business; the rise in POL prices is a body blow and will further depreciate the economic condition of the country.”
SAARC Chamber of Commerce and Industry Vice President Iftikhar Ali Malik said that the decision was nothing less than a drone strike pinpointed at crippling domestic trade and industry. Trade and industry was already facing multiple internal and external challenges. He said that while the entire business community had been hoping incentive package in difficult circumstances; the government had instead, announced an additional rise in oil prices. He also addressed serious concerns over the proposed increase in electricity tariffs.
Iftikhar Ali Malik also pointed out the apparent disparity between the government’s stated desire to contain inflation and its actual policies. He said the government would have to look into the situation as the shortage of gas and electricity had already pushed the industries to the brink of closure. SAARC Chamber vice president also expressed his doubt whether, when petroleum prices had skyrocketed and energy was not available, it would be possible to achieve the export target set for the financial year 2010-11.
Talking to Pakistan Today, Pakistan Industrial and Traders Associations Front (PIAF) also criticised the government for making “bulk” increases of Rs 5.97 in petrol and Rs 4.50 per liter in diesel prices in one fell swoop. PIAF Acting Chairman Shahzeb Akram strongly reacted to the nature of the decision and said that government had never bothered to pass on the benefit of decrease of international oil prices to the common man. He claimed that “it will prove to be the last nail in the coffin of Pakistani industry.”
He pointed out that the PIAF had long advocated that the government take necessary steps for the promotion of alternate fuels and reduce the gaping trade deficit caused by heavy oil imports. Agri Forum Pakistan Chairman Ibrahim Mughal assessed that only the increase in diesel price would put an extra burden of Rs 17 billion on the agriculture sector. He estimated that apart from harvesters, thrashers and other agriculture machinery – 0.85 million tubewells and 0.8 million tractors were being used in agriculture, which consumed some 3.5 billion liters of diesel per annum.
The increase in diesel piece would affect the price of virtually every agriculture produce, he said and urged the government to immediately rescind the pronouncement. Pakistan Goods Transporters Association General Secretary Nabeel Mahmood Tariq, while talking to Pakistan Today, said that the transportation cost of goods would burgeon, while fares of the public transport would also increase manifold. He estimated that the cost of transportation would increase by some 10-15 percent and would certainly impact on the final prices of all commodities.
