The downward revision in oil prices can be described as a 3
in 1 decision. It may effectively help doing away with the nuisance of
diesel-kerosene adulteration, reduction in overall transportation charges and a
substantial saving to the tune of over Rs1 billion to the government on account
of partial deregulation of freight pool system in the country.
A wide gap between diesel and kerosene prices and their
identical colour was a great source of temptation for the crooks that were
mixing the two products to mint money. This adulteration not only causing damage
to the engines but was seriously polluting the environment due to excessive
smoke emitted by the vehicles using the mixed diesel. Though the decision has
been taken too late but it is never late to amend the ways.
Zubair Motiwala, President of Karachi Chamber of Commerce and
Industry while welcoming the step has demanded of the government to ensure
reduction in transportation charges as well. The decision would be meaningless
unless the benefit of the decision is passed on to the people, he said. No doubt
it is an unprecedented step in the recent years. He urged the government to keep
on the practice of lowering the oil prices in accordance with the international
prices. Since a substantial cut has been allowed in aviation fuel, the reduction
should also reflect in the fares charged by different domestic airlines in the
country. The KCCI chief appreciated that despite an acute deficit in revenue
collection, the government did not make the low international oil prices a tool
to overcome the revenue deficit.
Abdul Sami Khan, President of All Pakistan Petrol Dealers
Association also hailed the government decision. He said that bringing the
prices of diesel and kerosene at par, abolition of freight pool system and
increase in commission of the petrol pumps was the longstanding demands. The
government has accepted some of them but the demand of increasing the commission
of the petrol pumps was still not fully accepted. He feels that reduction in oil
prices would certainly bring some positive impact on overall economic activities
in Pakistan. Sami Khan said that freight pool system was a boon for the
corruption that was making millions of rupees on false claims of transportation
of oil to remote areas of the country. He said though the freight pool system
has been partially done away with yet it would result in saving millions of
rupees to the government. A 6.37 to 17 per cent cut in prices of six different
oil products was announced by the government on March 14, 2001. In fact the
benefit of low international prices has been passed on to the consumers who is
unprecedented in Pakistan in the recent years. This is a step forward towards
the deregulation of the oil sector already announced by the government.
In another significant move towards deregulation, the
government has also partially done away with the freight pool system.
The petroleum products will now be available at 19 depots at
unified prices but the prices at the sale outlets will vary by five to 25 Paisa
in accordance with the transportation cost from depots to petrol pumps. The
government would however ensure sale of petroleum products at unified prices in
remote areas like Azad Kashmir, federally administered tribal areas and remote
parts in the province of Balochistan.
Announcing the downward revision of the oil prices, Secretary
Petroleum Abdullah Yousaf has said that despite an average decrease of 14 per
cent on six different products the taxes and duties still constituted over 50
per cent of the retail prices which are on the higher side.
The government earns Rs16 on sale of every litre of petrol
whose prices have been fixed at Rs30 per litre. A decrease of 6.98 per cent or
Rs2.25 a litre has been allowed in the price of petrol by bringing it down from
Rs32.25 to Rs30 per litre. The price of HOBC has been reduced to Rs33 a litre
from Rs35.25 i.e. a decrease of 6.38 per cent or Rs2.25 per litre. The prices of
kerosene and diesel products largely consumed by people in the low income group
have also been reduced by 7.58 per cent a litre and 15.62 per cent a litre
respectively. Rs1.25 has made kerosene cheaper a litre by bringing its price
down from Rs16.50 to Rs15.25 per litre. Similarly, high-speed diesel would now
be available in the market at the reduced rate of Rs15.40 as against its
previous price of Rs18.15 per litre. A 16.92 per cent or Rs2.75 have been
reduced in the price of high-speed diesel. 16.92 per cent or Rs2.75 has also
reduced light diesel oil per litre from Rs16.25 a litre to Rs13.50 per litre.
The highest reduction in oil prices approved by the federal government was in
aviation fuel i.e. JP-4 where Rs3.10 has decreased prices per litre. Petroleum
Minister Usman Aminuddin has said that the government which has honoured its
words to pass on benefits of reduction in oil prices in the international market
to the domestic consumers and would continue to do so in future also.