Trade bodies lament over fuel price hike

By Our Correspondent

KARACHI: Trade bodies criticised the recent increase in petroleum products’ prices and termed it negative for the industry and people.
The increase was made by the Oil and Gas Regulatory Authority (Ogra) on Sunday, with a substantial hike of 6.10 rupees per litre in petrol prices.
Federation Pakistan Chamber of Commerce and Industry (FPCCI) president Sultan Chawla has strongly condemned this increase made by Ogra. The increase of between five to nine per cent, including increase in kerosene oil, would hit the society, much of it living below the poverty line and also the industrial and agricultural sectors, the main drivers of economic growth.
He termed the increase as totally unjustified, ostensibly reflecting increased international oil price while in reality, aimed at meeting the IMF-dictated revenue target, which could have been met through other available means, including cuts in government expenses.
Karachi Chamber of Commerce and Industries (KCCI) president Haji Abdul Majeed said, “The increase in prices of petroleum products will further undermine industrial growth already reeling under power shortages and outages.
A number of industrial units are already closed or are operating at below optimum levels. Ogra must revise its decision and withdraw the increase with immediate effects.”
Transporters and general public sharply reacted to the huge increase in petroleum products’ prices, saying that the fresh hike in oil prices is not acceptable. Transporters threatened that if the increase was not withdrawn, they will call for a strike.
In a statement, Pakistan Businessmen and Intellectuals Forum (PBIF) president Mian Zahid Hussain said that the Oil and Gas Regulatory Authority (Ogra) had decided to allow over six rupee per litre increase in petrol prices when the global oil prices were on the decline.
“Ogra’s decision shows that the oil prices revision has no relation with the price fluctuation internationally but to mint some extra bucks to continue with the government’s lavish spending at the cost of the poor man’s hard earning,” Zahid said, adding that massive increase in POL prices will add to the woes of the public as it will result into skyrocketing of the prices of all essentials and a big blow to the economy.
The PBIF chief said that frequent increase in gas, power tariffs, transport fares and oil prices had already accelerated capital flight and discouraged local and foreign direct investment.
The IMF gave a stand-by facility of 7.6 billion dollars, agreed in November 2008 which was increased afterwards to 11.3 billion dollars in July, to avert a balance of payments crisis. Fund has so far disbursed over five billion dollars under this facility.
The country’s foreign exchange reserves hit a record high of 16.5 billion dollars in October 2007 but fell to 6.6 billion dollars by November 2008, derived by imports, which caused the country to go under IMF umbrella.
While the fund in its country report for Pakistan, released on January 07 2010, wrote, “The rebound in inflation was due to recent food and petroleum product price increases and the electricity tariff hike in October.”
Investors and traders are expecting that this new price hike in POL prices is likely to increase discount rate in the forthcoming monetary policy stance.