The government on Friday decided to allow petrol prices to decline by 1.3%, in what appears to be an attempt at striking a balance between the need to keep government tax revenues steady and keeping the electorate happy by passing on the effects of lower global oil prices to consumers. In its recommendations sent to the Petroleum Ministry on Thursday, the Oil and Gas Regulatory Authority (Ogra) had proposed sharper cuts in the prices of petrol, diesel, and kerosene. However, that proposal ran into opposition from the Finance Ministry, which has committed to the International Monetary Fund that it will raise tax revenues.Over 25% of government revenues come from the energy sector, and much of that comes from oil. As oil prices began declining late last year, the government saw a precipitous drop in its revenues from the taxes on oil, resulting in the fiscal deficit becoming wider.Prices of high-speed diesel, a fuel used by transportation businesses and farmers, will go down by Rs2.06 per litre, or 2.4%, from Rs87.11 per litre to Rs85.02 per litre. Ogra’s initial proposal had called for a Rs5.48 per litre, or 6% reduction in its price, to Rs81.63 per litre. For light diesel oil (LDO), an industrial fuel, prices will come down by Rs4.92 per litre, or 8%, from Rs61.51 per litre to Rs56.59 per litre. If Ogra’s proposal had been accepted, LDO prices would have come down by 10%, or Rs6.33 per litre, to Rs55.18 per litre. Kerosene oil, used as a fuel by the poorest of Pakistanis, will see its price decline by Rs4.83 per litre, or 7.4%, from Rs64.94 per litre to Rs60.11 per litre. Ogra has proposed a 10% cut, or Rs6.33 per litre, in kerosene prices, down to Rs58.61 per litre. The government did not increase the prices of petroleum products in July despite the fact the same had risen in the international market. The loss incurred by the government in July, he added, would be partially recovered in August. The question arises why is the government not passing the full benefit of low international oil prices to the masses? Instead, it is being niggardly to limit the benefit to the people, which is regrettable. Since the massive reduction in oil prices in the international markets, the government has failed to fully pass on the benefit of this price reduction to the general public. In fact the government has never passed on the full benefit of price reduction to the masses. Rather, it has imposed exorbitant taxes on the sale of POL products considering it a cash cow to meet its commitments with the International Monetary Fund. Petrol and diesel are major products that help generate most of the revenue in the oil sector. The government should not attempt to befool the nation. In fact, there is no check on prices and inflation has gone up. The relief must trickle down to the masses. There is no visible change in the prices of daily use items and fares as well as transportation charges. Reduction in oil prices is good news but unfortunately the nation never enjoyed the full benefit of such reduction. There should be an across the board effect of this price reduction in all related sectors, especially the transportation and food industry. Why is electricity so high priced still? Why the did the prices of daily use commodities not reduce? Can Mr Dar answer these questions?
pk.shafaqna.com
