POL price variation forces govt to bear Rs5bn loss monthly

ISLAMABAD: The government is suffering Rs.5 billion per month loss for not passing on the full price of petroleum products to consumers, which is presently being charged in international markets, official sources told APP here on Wednesday.

The Pakistan People's Party (PPP) led coalition government provided relief to the public by maintaining the prices for four months despite the surging trend in world markets, which deprived the national exchequer of Rs. 13 billion.

In spite of 27 per cent increase in POL prices in international markets since November 2010, the domestic prices have been partially adjusted by 4.95 per cent this month. "However, the government will continue to lose more than Rs. five billion per month for not passing the full price to the consumers," the sources maintained.

Petroleum prices in Pakistan were linked with international market, they said recalling that the government had brought down the petrol price from Rs.86 to Rs.56 per litre after reduction in world market some two to three years ago.

"Increase in oil prices is inevitable, if in the coming months international rates decline, Oil and Gas Regulatory Authority will automatically revive the prices accordingly as was done in past," they maintained.

Lamenting on the poor policies of the previous government, the sources said the authoritarian regime in 2007 absorbed the international price escalation for which everyone had to pay in the form of energy shortage and accentuated by rising circular debt.

Had the previous authoritarian regime passed on the increase in POL prices to the consumers, the country would have a much-better and flourishing economy.

Contrary to general perception, the government's share in the sale of petroleum products is relatively small. At present, it collects 27 paisas on every Rs. 1 of sold POL products, while, the Indian government charges 52 paisas on every rupee, Italy 67 per cent, Germany 62 per cent, France 60 per cent and the United Kingdom 54 per cent.

The government is pursuing a practical and aggressive petroleum strategy to achieve autarky in oil and gas sector, which will help bring the import bill to the lowest level.

"Despite being a popularly elected one, the PPP-led government is not afraid of taking tough economic decisions, which are important for strengthening a democratic Pakistan and to bring an end to its economic woes," he said.

Last year, the government advanced a promising set of economic reforms and its key measures for restructuring of the country's weak tax system and big cuts in energy subsidies.

The proposed strategy would have reduced a huge budget deficit, which is now over five per cent of Gross Domestic Product, besides helping to control inflation, which is presently at around 15 per cent, but unfortunately due to political pressure it could not do so.

"But, we being a responsible nation should set aside our petty differences and short-term gains and work together for long-term national interests," the sources maintained.