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
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
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
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
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.