Petroleum Products prices rising up to Rs5.89/litre

Government, is about to approve up to Rs5.89/litre massive increase in the prices of petroleum products (POL).

Often parliamentarians have registered their severe anger, coupled with serious concerns at various sessions of the upper and lower houses during August against continuous gigantic hike in the prices of fuel and electricity approved by the incumbent regime. Similarly, several protest demonstrations were staged against hike in different areas of the country. But the government has so far not accepted the demands of the parliamentarians and the common man to withdraw POL, gas and power tariff hike and is continuously rubbing salt into the injuries of over-burdened 180 million people of Pakistan. And, this time the proposed massive increase in oil prices particularly at a time when the economy was struggling for revival would put negative impact, which is also not in the favour of business growth and might deprive the government of public sympathy and popularity as well. Likewise, the masses who are already bearing the brunt of skyrocketing prices of POL products, power tariff and gas prices, coupled with unscheduled long hours of power loadshedding in the country, will now find a tsunami of inflation in the market with the start of next month of September.

The sources further said that inflation hit masses would bear another jolt in the form of gigantic POL price hike with the start of upcoming September as the OGRA after completing the required consultation process with oil marketing companies (OMCs) for the determination of next month oil prices has dispatched a summary to the Ministry of Petroleum & Natural Resources for further necessary process and action at its end. The OGRA, to protect the inflation-hit people of Pakistan from expected mammoth increase in the prices of petroleum products, has also strongly recommended the government not to pass on the increase in the POL prices to the masses and maintained the oil prices at the existing level by adjusting the share of petroleum levy already imposed on oil prices. However, the government would take a final decision today (Saturday) with regard to the future POL prices as the finance ministry is set to get approval from Prime Minister Nawaz Sharif on either raising or reducing the petroleum levy on the POL prices, sources added.

They also told that the recommended heavy up to Rs5.89/litre hike in POL price if secures approval of the incumbent government then the price of petrol to go further up by Rs4.64/litre, High Speed Diesel (HSD) Rs3.57/litre, Kerosene oil Rs4.71/litre, and Light Diesel Oil (LDO) Rs2.31/litre while Rs5.89/litre sky high raise in the per litre price of HOBC would also be made.

At present, petrol is selling at Rs102/litre, high-speed diesel at Rs 109.76/litre, light diesel oil (LDO) at Rs 96.12/litre, Kerosene oil at Rs 101.28/litre while HOBC is available at Rs129.16/litre in the open market of the country.

“Under a monthly oil price review mechanism, the government is expected to jack up the prices of all petroleum products as decrease in the rate of petroleum levy (PL) is not in sight owing to upward trend of oil prices in the international market coupled with depreciating value of Pak rupee against US dollars, unrest in the middle east and the cash starvation being faced by the government,” a senior official at petroleum ministry on the condition of not to be named said, adding, “The Finance Ministry can play a pivotal role in providing a sigh of relief by recommending the government to decrease the rate of already imposed PL on POL products.”

Beside this, the official also warned the government that any decrease in the PL or General Sales Tax (GST) to absorb the increase in international oil prices would put a negative impact on the country’s economy, forcing the government to borrow heavily from the banking system, leading to accentuation of price pressures, depreciation of rupee and possibly a rupture of present relationship with the International Monetary Fund (IMF). More, any slight increase in the POL product would multiply the cost of doing business, affecting the productivity of economy and competitiveness of exports and depriving the country of the precious foreign exchange earnings, he added.

The latest recommended surge in oil prices would of course unfold negative consequences for the economy and the lives of ordinary people. The proposed hike in POL prices if approves will trigger inflationary impact and will ultimately affect the overall trade and business while as an immediate result will unleash inflation to add further miseries to already inflation hit masses. This proposed hike would also leave painful impact on the ordinary persons who were suffering a lot due to cost-push inflation in the country.

When contacted with the economists, they said that increase in petroleum prices would unleash a new wave of inflation and would raise cost of doing business in the country. Instead of increasing petroleum prices, the government should decrease petroleum levy to save economy from harmful consequences of high petroleum prices.

They also feared that such frequent and high increase in POL products might shatter the confidence and leave negative impression and impact on the local and foreign investors, which are dire need of the country for economic stabilization.  They were of the view that the rise in oil prices would slow down industrial activity and depress growth prospects of economy, leading to exacerbating the incidence of unemployment and poverty in the country. Prices of all other commodities and services would also increase in direct proportion to the rise in the prices of POL products. They said that all of this is bound to be very painful for ordinary people, especially at a time when growth rate is already stagnant, inflation is likely to be on record high and government is increasing the price of POL and electricity by a highly significant margin