POL PRICE CUTS NOT A RELIEF BUT EYEWASH

SHAMIM AHMED RIZVI
June 1 - 7, 2009

In a glaring example of befooling the nation and making fun of the Supreme Court verdict the Government on Thursday last announced just 2.5% cut in the prices of POL products in the name of honoring judgment of the apex court and providing the so-called relief to the consumers. Prime Minister Yousaf Raza Gilani approved 2.5 percent reduction in three major petroleum products including petrol, high speed diesel (HSD) and HOBC following the directions of the Supreme Court. The price of petrol (motor gasoline) has been reduced by Rs1.45 to Rs56.21 per liter; the price of HOCB by Rs 1.80 to Rs 70.28 per liter; and high speed diesel (HSD) by Rs 1.47 to Rs55.67 per liter. The Supreme Court had desired reduction in prices of about 20%.

The decision has been taken after the consultation of Petroleum Ministry and Finance Ministry. Petroleum Ministry had proposed 5 percent reduction in prices of petroleum products but Finance Ministry showed reluctance as it had committed to International Monetary Fund (IMF) to meet the revenue target through the collection of Petroleum Development Levy (PDL). According to the Finance ministry PDL has been one of the key sources of revenue for the government because collection from the main tax paying sectors was on the decline due to economic recession. Sources said that after the current reduction, the government collections in terms of PDL would further drop between Rs 1.25 billion to Rs 1.50 billion.

Government had earlier projected 14 billion PDL for the month of May that was less against PDL collection in earlier months due to slight increase in prices in global market. Now the government would also be facing reduction by around Rs 1.5 billion in PDL collection after the recent reduction in oil prices, sources said. A government announcement claimed "in compliance with the Supreme Court orders, the government had passed on the benefit of reduced POL prices in the international market to the consumers by decreasing 2.5% prices of the petroleum products keeping in view the overall economic situation of the country.

Federal Secretary Ministry of Petroleum and Natural Resources Salim Mahmood Salim said that the apex court had not instructed the government to reduce the prices of petroleum products by 20%. "Keeping in view the overall economic situation as well as growing expenditures on internally displaced persons (IDPs), the government passed on benefits to the consumers whatever was possible for it, he added. He also mentioned that the prices of POL products were rising again in the international market so the government restricted only to reduce 2.5% prices.

The former Vice President of the Supreme Court Bar Association Muhammad Ikram Chaudhry, in a press statement, condemned the recent reduction in petroleum products prices, saying that two and half percent prices reduction is a slap on the face of people by the Zardari regime. He said more than 20 percent was proposed in the interim commission report filed before the Court in the constitution petition of Iqbal Zafar Jhagra, the Secretary General of the Pakistan Muslim League-Nawaz.

"Despite statement of Secretary Petroleum that the government was earning more than 25percent per liter, the meager reduction in petrol prices shows how casual are the public functionaries and the government regarding the rights of the public at large," Ikram Chaudhry said.

He demanded of the government to reduce its expenditure and import of luxury items and stop obtaining further international loans from the IMF and World Bank. He said the future course will be decided on June 15 after receiving final report on petroleum prices by the commission. On March 30, the Supreme Court had set up the commission under Justice (R) Rana Bhagwandas to look into the oil pricing mechanism and also to probe the price trend of petroleum products since 2001 and submit a report in a month. Later on, the commission while presenting its interim report before the court suggested to the government to retrieve Rsl5 billion from the "special reserves" kept by refineries for future losses, up-gradation of their capacity and improvement of the quality of their products, none of which was ever done, by suitably appropriating the same for social welfare schemes and development projects.

The commission observed that it is common knowledge that refineries in Pakistan have been charging the price of higher quality since 2001 but producing inferior quality diesel with 1% sulphur content a banned item throughout the world

The way this decision has been taken and announced bespeaks of the callous attitude of the Government towards the suffering public. In this decision too, true to its past pro-elite practices, the Government has doled out more benefit to the well to do by giving proportionately more reduction on petrol and HOBC then diesel and Kerosene oil that have direct bearing on the life of common man. The Government functionaries are fully aware of the fact that over 75% population of the country travel by buses, coaches and wagons and they are run on diesel and not petrol. By reducing its prices by Rs1.47% a liter it has not practically provided any relief to the traveling public. Government only added to the profits of buses and wagon owners. Had there been any practical sense amongst the decision makers or any concern for the poor class they could have reduced the prices of diesel and Kerosene oil by 5% and maintained the same level of prices of petrol and simultaneously forced the buses and wagon owner to reduce their charges from traveling public by at least 5%.

The claim of the Government that it has provided relief to the common man is just eyewash. As a matter of fact, the so-called people and democratic government has been the most callous to the common man in case of POL prices and passing on the benefit of falling oil prices in the international market. In the first place, the Government should not have waited for the Supreme Court to issue a directive on the subject and must have lowered the prices of oil when international prices crumbled down. However, the Government preferred to pocket undue profit for a long time and refused to respond to the calls by every section of the society to pass on the relief to the masses. In fact what the Government describes as a relief is no relief at all but right of the people. When a decision has been taken lo retake the domestic oil prices with those prevailing in the international market then there is no justification to close your eyes when there is downward trend in prices.

The Government has already eliminated the subsidy on oil. Therefore, it is saving what it was expending on that account. Secondly, even after clear instructions by the court, the Government took almost a fortnight in taking a decision and that too turned out to be eyewash. The Supreme Court verdict, which was widely acclaimed by the people in the length and breadth of the country, required the Government to provide substantial relief. The Judicial Commission, formed for the purpose, went deep into the pricing mechanism and other factors and then made recommendations for cut in the price but it seems the Government is in no mood to provide relief to the hard-pressed people. It is clear that the Government is cash-starved but it should explore other means than fleecing the masses to increase its revenues. There are several segments of the population that earn significant incomes but are not ready to pay their due taxes and the Government should make them to pay. We hope that the authorities concerned would review the decision and reduce the prices of POL products in line with their reduction in the international market. This is imperative as POL prices determine prices of almost all product and services.