What was seen on a few streets in Karachi yesterday could well be repeated today for two different, yet similar reasons. Roads were choked and people got stranded after bikers protested the refusal of petrol station owners to sell petrol - saying that they are on a strike.
The strike, they say, was to demand a government raise in the petroleum dealers margins which has now been fixed in absolute terms, according to the new pricing formula. What was noticeable though was the timing of the so-called strike as it happened just a day before the government was expected to announce a price revision in petroleum products.
It has become a common practice of late by the dealers to disrupt the sales on the eve of the new month, when the prices are expected to be revised upwards. Rumours had it that the government has agreed in principle to raise petroleum prices by 12-13 percent on petrol, diesel and other products after having absorbed the impact for four months.
This made it lot easier for the petroleum dealers to choose the right time for the strike as the anticipated increase was massive and it would certainly result in substantial inventory gains ranging from Rs10-12/litre on various products.
Ogra and the oil marketing companies cannot entirely shift the blame to the dealers for causing trouble to the citizens, as they should also share the responsibility of being negligent and not acting to prevent interruption in supply.
And now, a word on the governments decision, which would have been made by the time this article is published. Wilting to the political pressure and delaying the price increase has left the government with absolutely nothing more to absorb. It has given up its portion of Petroleum Levy almost entirely by freezing the rates and continuation will literally mean subsidising the petroleum products - something which the government can ill-afford at this juncture when it is tangled in a fiscal constraint.
While the government cannot be blamed for the rise in global crude oil prices, which leaves it with no room but to pass it on to the consumer, it should, however, share the blame now for delaying the inevitable, which will now likely cause greater troubles. Had the prices been passed earlier, the impact for the March revision would have been much less than it would now be, if the government reverts to Rs10/litre Petroleum Levy on petrol.
The government still does have options not to pass on the entire impact to the consumers by partially passing the rise and taking a hit on the PL revenue. Some may call it a wise decision, but it will only add to the woes of the fiscal managers at a time when the country is already running a high fiscal deficit.
So if the prices are actually increased by the magnitude prescribed by Ogra, the newspapers this time may well be right by running headlines such as "government drops the petrol bomb because when you make economic decisions on political reasons, you have to face the consequences.