Government warned against subsidising POL prices

While terming the oil pricing issue as being politicised, a former chairman of Federal Board of Revenue (FBR), Abdullah Yusuf, has warned the government that decision to keep oil prices unchanged despite rising trend in global market would further worsen the circular debt issue. "The step would prove to be a ''bombshell'', leading to complete collapse of electricity and oil supply chain across the country," he said.
He said that oil pricing issue had been politicised as the government withdrew the decision of increase in oil prices on January 7 after facing political pressure. "The government made a wrong decision in 2007 not to pass on the rising impact of oil prices to the consumers. That resulted in Rs 175 billion circular debt," he said while addressing ''Third Oil and Gas Pakistan 2011 Forum'' here on Saturday.
He said that the government was going to repeat the same mistake now. That would further worsen the circular debt issue. "Market is to determine the price, and you can not involve in subsidisation that makes whole economy unviable," he said, adding that circular debt has not been resolved so far despite repeated attempts by the government.
"Now the government is facing political pressure again, to keep oil prices unchanged during the coming month of February," he said, adding: "how much you can pay out of your pocket." He said that circular debt was a bombshell that would explode, causing a collapse of the whole system of electricity and oil supply in the country.
A former Petroleum Ministry Secretary, Dr Gulfaraz Ahmad, said that the government should keep oil prices stable. "The government should not pass on the whole impact of oil prices to the consumers, as it would negatively affect some sectors at a level that they would never recover again," he said, adding that it was the right decision of the government to subsidise oil prices when crude oil in global market had surged to $147 per barrel. "Many sectors would have collapsed if the government had not subsidised oil prices," he said.
Country Manager of Kuwait Petroleum Corp (KPC), Talat Jabeen, said that despite all problems, Pakistan had never defaulted on payment on account of fuel supply. "KPC supplies 3.7 million tons diesel to Pakistan per annum to meet 85 percent deficit of the product on 60 days deferred payment," she said, adding that despite critical law and order situation, KPC feels comfort while working in Pakistan.