Reduction of Rs.5 per litre inadequate

The government has announced a reduction in prices of petroleum products by Rs.5 per litre on Saturday, rejecting Ogra’s recommendation for reduction of Rs.11 per litre. Anyow, according to government notification petrol will be available at Rs71.25 per litre and high speed diesel at Rs75.79 from today. Instead of passing on full benefit of reduced oil prices in the international market to the consumers, the government decided to amend the sales tax collection mechanism, and it will have Rs. 25 per litre in taxes and levies. A fixed sales tax of Rs14.58 per litre has been imposed on petrol; earlier the rate was 20 per cent of the petrol price, or Rs10-12 per litre. A day earlier, Prime Minister Nawaz Sharif said in Lahore that prices of petrol and diesel had been further reduced by Rs.5 per litre.
Finance Minister Ishaq Dar bragged in a statement that “the prices announced for the month of February are another manifestation of the government’s resolve to provide maximum facilitation to the general public”. As global oil prices hover at the lowest recorded levels since 2003, and have declined from $114 per barrel to $32 per barrel over the last one year, the government has not been reducing the prices commensurate with reduction in international oil prices. Brent March futures LCOc1, which expired on Friday, closed at $34.74 a barrel, 85 cents or 2.5 per cent higher. In 2009, international oil price was $84 and price per litre of petrol in Pakistan was Rs. 84 per litre. In 2011, the crude oil price in the world market was $100 per barrel, and in Pakistan price of petrol per litre was Rs. 84 per litre.
Crude oil in international market have had rollercoaster ride for the last 10 years. A series of events had led the price to exceed $60 by August 11, 2005, leading to a record-speed hike that reached $75 by the middle of 2006. Prices then dropped back to $60/barrel by the early part of 2007 before rising steeply again to $92/barrel by October 2007, and $99.29/barrel for December futures in New York on November 21, 2007. Throughout the first half of 2008, oil regularly reached record high but came down to $84 in 2009. Anyhow, the opposition parties are set to jointly give tough time to the government in the upcoming National Assembly session in a call-attention notice for not passing full benefit of internationally declined prices to the people.
“All opposition parties will jointly raise voice in and outside the parliament for inadequate and unjustifiable decline in petroleum prices,” said an opposition party member. PPP has termed the decline in prices of petroleum product a mere joke with the masses. We have rejected the government’s decision to reduce the petroleum products’ price by Rs5 per litre,” said PPP’s lawmaker Salim Mandviwalla, in his party’s reaction over meagre decline in petroleum products prices. PTI also rejected reduction of Rs. 5 per litre by the federal government, as it did not pass the benefit of falling petroleum prices internationally to the masses. This is injustice to the people of Pakistan that the government is selling petroleum products to the masses at higher rates while buying it from international market at low rates.