Monday, May 5, 2008, Rabi-ul-Sani 28, 1429    

Price hike reaches alarming level

Amanullah Khan

Karachi—All taxes on petroleum products should be done away to contain price inflation which soaring to alarming proportion in Pakistan . The unabated increase in oil prices especially petrol and diesel have opened a floodgate of price inflation to alarming proportion which is depriving the middle income groups. It is painful to note that the consumer are suffering due to the inflated oil prices on one hand while on other hand most of the filling stations have tempered their meters. This is the height of disorder in respect of price, quality and quantity control in the country.

It may be noted that the petrol which was being sold at Rs53.7 per litre on February 17, 2008 to Rs 69 plus per liter as a result of latest increase on May 1, 2008. Similarly Diesel prices have been shot up from Rs32 per litre in Feb 2008 is now being sold at Rs50 plus per litre. Consequent to oil price increase every segment of trade is demanding its increase in prices.

Recently, the government has allowed increase in transport fares but due to recent hike in oil prices the transporters were again threatening to go on strike if they were not allowed further increase in transport fares. The petrol pumps or dealers have been allowed a commission of around 2.5 percent on their sales. Abdul Sami President of Petrol dealers association said that actually the commission was around 4 percent in 2002 but it was gradually reduced by the government. He said that refineries in Pakistan have been allowed to directly export the surplus motor gasoline that is another cause of increase in oil prices. On the other hand the pricing mechanism is also very complicated as it was never disclosed by the relevant authorities that at what price and from which source the oil is being imported.

Pakistan has tied up its energy prices including oil and gas with the international prices under WTO requirement, but the economic managers have ignored the fact that the income level of the people is not been tied up with the international GNP.

This highly contradictory while putting things on the ground. If the purchasing power of the people has not been raised to the prices level international how they would survive? A question to ponder upon for the economic experts in Pakistan . People were attaching great hopes with the arrival of new government that it would not go crazy for revenue collection like former finance minister later on turn the prime minister Shaukat Aziz ignoring the fact that masses of the country don’t have that sort of income level to come up to the tax regime in Pakistan.

The cost of living has gone beyond the reach of the common man which calls for either to increase the wages or reduce the prices of essential items like POL products, electricity, gas which is considered the life line in the modern living style.

The importance of the basic needs of the people of this country carry more weight than the WTO or other conditionality of the international donors like World Bank or the developed countries of the west or the United States . The alarming increase in food and other essential items of daily life is response for every day rise in street crime!