KARACHI: Irfan Iqbal Sheikh, President Federation of Pakistan Chambers of Commerce and Industry (FPCCI), has strongly demanded that the government must immediately pass on the decrease in the international oil prices to the businesses and the general public.
It is pertinent to note that past few weeks have seen international oil prices drop steadily in the wake of lower than expected demand from the U.S. and China; along with more countries opting for Russian oil, he added.
Irfan Iqbal Sheikh maintained that international oil prices are hovering around $73 per barrel and they may even drop to $70 in a matter of few days – as per industry estimates and trend analysis. He highlighted the fact that last time petrol prices were fixed, international crude oil prices were in the range of $78 – 80 per barrel.
He pointed out that the drop in oil prices is more than 5 percent and this creates the space for the government to reduce the petrol price by at least Rs 18 per litre. He also demanded that government should revise its policy on fixing petroleum prices by passing on the reduction in oil prices immediately as it does in the case of an increase.
FPCCI Chief expressed his concerns that credible media outlets are reporting that OGRA wants the government to reduce petrol price only partially to what the drop in international oil prices can translate into.
Since, the government has shelved the plan to provide targeted subsidies on petrol to the weaker segments of society due to the enormous pressure from the IMF, it should to do the needful and pass on the entire benefit to the consumers, immediately.
Irfan Iqbal Sheikh explained that passing on the full benefit to the public will not affect any of IMF conditionalities or budget-making exercise; because, PDL is levied as a fixed surcharge per litre rather than a percentage of the price.
He also expressed his deep concern that the government has collected PKR. 800 billion so far in the outgoing fiscal year on account of petroleum development levy (PDL) and what else the government wants to make from petroleum products.
He stressed that this singular, timely step can break the momentum of inflationary pressures and provide some breathing space. The government itself projecting that the inflation will remain at least 21 percent in FY24 – which will exacerbate the economic conditions and cost of doing business even further.
Irfan Iqbal Sheikh also highlighted that the first cargo of Russian oil is expected later this month or early next month; and, the government would have another opportunity to reduce petroleum prices in the country then onwards in a phased but progressive manner.
We should also increase our orders for the Russian crude incrementally to enhance the share of the Russian oil in our crude mix to make it cheaper, he added.
Irfan Iqbal stated that the business community has supported government’s late but right decision to import Russian crude for the four reasons: (i) it can cost up to 30 percent less than the international market; (ii) import payments will be made in Chinese Yuan instead of dollars, which will help stabilize Pak Rupee; (iii) even more competitive prices may be obtained after the teething problems are solved vis-à-vis shipping and payments; and, bigger orders can be placed as the result; (iv) idle capacity of three big Pakistani oil refineries – which can refine Russian crude – will be put to productive use, which continue to operate between 50 – 60 percent only most of the times.
Copyright Business Recorder, 2023