Prices of the petroleum products are being raised on a monthly basis on one pretext or the other



Sep 30 - Oct 06, 2002

The prices of petroleum products were increased last week, for the ninth time during the year. The latest increase which ranges between 20 paisa a litre for kerosene and 34 paisas for petrol and high octane blending component (HOBC) brings the total increase in prices by about 10 per cent during the last nine months. The reason for the latest hike, as given by the authorities relate to Iraq crises expected shortage of oil in case hostilities breakout and war premium imposed by various agencies.

WAPDA and KESC have also increased their tariff quietly which were put on hold by personal intervention of the President Musharraf last month. On persistent pleas of WAPDA, the National Electric Power Regulatory Authority (NEPRA) had allowed an increase of 47 paisa per unit in WAPDA tariff against its demand of 88 paisas w.e.f. July 01, 2002. However, taking not of the burden the common man will have to bear because of this increase, the President ordered WAPDA to withhold its implementation and directed NEPRA to revise its decision. After waiting for over six weeks WAPDA has implemented the decision w.e.f. 01.08.2002 instead of 01.07.2002 as per earlier decision. Gas prices which were also put on hold are also being increased by implementing the revised tariff.

Prices of the petroleum products are being raised almost on a monthly basis on one pretext or the other. The last increase announced by the Oil Companies Advisory Committee last month was on account of abolition of excise duty on various petroleum products as well as on the basis of the international product prices and applicable government levies.

The government seems to have closed its eyes to the excesses of the bodies assigned the task of regulating the prices of utilities and consumer items, so long as the lion's share on account of its levies, duties, surcharges, etc, continues to flow to the State exchequer.

The international price of crude oil is estimated to have risen by about 10 per cent during the year. During the same period the rupee has gained against the dollar by about eight per cent. In view of the near-parity between the rise in the international price of crude oil and the value-gain by the rupee, there was little justification for frequent variations in prices of such strategic items as oil products.

The main reason for changes of prices seems to lie elsewhere. The government has come to rely on oil, gas and electricity as important sources of revenue generation. Hence the frequent changes in prices and tariff of these items. Shortfalls elsewhere are attempted to be made up from these items. In case of oil products, government taxes constitute more than 60 per cent of the price.

This was already known but its authenticity was verified when the director-general, ministry of petroleum and natural resources, submitted the formula of price fixation to the Lahore High Court recently. According to this formula, in the retail price of Rs.34.41 per litre of petrol (the prevalent price before the latest increase) taxes constituted Rs.17.28; the refinery price of a litre was only Rs.13.01.

These taxes comprised the petroleum development levy Rs.11.99 sales tax (Rs.4.41) and customs/excise (Rs.0.88). Other POL products are also subject to these levies in the same proportion. Instead of stabilizing costs of these strategic products which affect prices of almost every product in the market by adjusting taxes, the government opts for an increase in revenue. This is because every increase in prices brings more than half of the addition into its coffers.

This short sighted policy of the present government has added to miseries of the poor and fixed income group which form majority of the population in our country.

This is a fact that despite all rhetoric and tall claims of improvement in economy, the fixed income group, salaried class and the common man has received no relief. Instead they have been burdened with constant periodical doze of the hike in the prices of utilities with its adverse effects on cost of living. Electricity tariff has been raised by over half of dozen times and gas and petroleum products on over dozen accessions since this government took over in 1999. According to survey recently conducted by daily Dawn, petrol price averaged around Rs.26 a litre in Sep. 99. It now cost Rs.34.58. That's an increase of 32 per cent. The international prices of crude over the same period, went up from $22 to $25.99. The increase is that of 18 per cent. Electricity in October 1999, consuming around a 1000 units of power was charged at Rs.2,800.

Consumption of same number of units now costs Rs.4,480. That's a 60 per cent raise. In 1999, a gas bill for 500,000 units stood at Rs.2,650. The consumption of same number of units now costs 3,300. It means an increase of 23.6 per cent.

It is a harsh reality that the silent majority which Gen. Musharraf claims to be his supporters have been treated most callously by the present government. The people are loosing patience and now widespread resentment is gaining ground against government policies allowing increase in the tariff of utilities like gas, electricity, petrol and telephone charges. This has partly led to increase in the prices of large number of essential food items making the life of common man more miserable during the past two years. The agony of this scenario has been multiplied by the ongoing exercise of downsizing in almost every government and semi government organizations where again the majority of the victims belong to lower classes.