Price hike ghost appears once again..!
February 10, 2012
The price hike ghost has once against come out to the consumers as the government and liquified petroleum gas producers have dropped bombshells on the consumers by increasing prices of oil products and CNG and LPG.
Petroleum Oil Lubricants (POL) prices were raised from Rs 3 to 6.29 per litre, a 10 percent infrastructure development surcharge was levied on compressed natural gas (CNG) and the LPG price was raised by Rs 14 per kilogram with immediate effect.
As per the Oil and Gas Regulatory Authority (OGRA) notification, the new price of petrol is Rs 94.91 per litre, HOBC Rs 118.20, HSD Rs 103.46, kerosene Rs 92.09 and LDO Rs 90.21 per litre.
Analystsviwed that the government’s decision to increase the prices of POL products will fuel inflation in the remaining months of the current fiscal year.
“The rise of three-six percent in POL prices would further stoke benchmark consumer price index (CPI) inflation,” said an analyst at InvestCap Research.
The State Bank of Pakistan (SBP) had already warned rise in inflation due to increase in the energy prices in the coming months, despite fall in inflation growth to a single digit.
The central bank said that the government’s efforts to keep its borrowing from the SBP in check during the initial months of FY12, helped keep the demand-driven inflationary pressures at bay, which was supplemented by the easing of food prices.
As a result, year-on-year (Y-o-Y) CPI inflation declined to a single-digit (9.7 percent) in December 2011 after remaining in double digits for the last two years. “While the increase in the energy prices, recent weakening of the rupee and the base effect may increase inflation in the coming months, the end-year average inflation is likely to fall close to 12 percent,” the SBP said in the first quarterly review on the state of Pakistan’s economy.
Analysts said that the prime factors behind the fresh rise in POL prices included rise in international prices during January, increase in average crude price, which went up by $4 per barrel in January against $110 per barrel in December 2011; and depreciation of the local currency against the dollar by 1.2 percent to Rs 90.3 against Rs 89.3 in December 2011.
The analysts, however, said that it would be an added incentive to jack up petroleum levy collection on these products, given the larger extent of increase this time.
The businessmen of the country demanded the government to immediately withdraw the recent price hike in petroleum products, LPG and CNG.
Rejecting the increase in prices of petroleum products, the business community said that the industry is undergoing the ordeal of poor exports, high cost of doing business, militancy and political and economic instability.
“In such a critical situation, the proposed increase in prices on petroleum products would prove to be a very unpopular decision,” according to a joint statement of prominent businessmen and industrialists released by the FPCCI.
“The decision was taken without consultation and the consent of the stakeholders that may result in widespread discontentment in the business community,” said Senator Haji Ghulam Ali, President, FPCCI.
“The closure of industry due to detrimental effect of high cost of production owing to higher utility tariffs will lead to flight of capital, massive unemployment and decline in the government revenue,” he added.
S M Muneer, a prominent industrialist, and former FPCCI president, rejected the decision and said that it would be impossible to provide locally-manufactured goods in domestic markets at affordable rates.
MianAbrar, President Karachi Chamber of Comerce and Industry said that this is quite infamous decision of the present government who will earn and gain billions in return, which is injustice and exploitation of the common man.
“As a result of the government’s haphazard energy policy, the public is suffering tremendous hardships, as most of the public transport vehicles remain off the roads, while a few had doubled their fares, claiming they are running on petrol and diesel,” he said.
He demanded the government to immediately withdraw the POL price hike for industrial development and accelerate the pace of progress and prosperity of the common man.
“Industrial production is suffering, exports are down and jobs are being lost due to the tight monetary policy, electricity load-shedding, petroleum prices and high cost of doing business in country,” he added.
MianZahidHussain, former chairman of Karachi Association of Trade and Industry, said that the business community is functioning under tremendous pressure from the global recession, the reluctance of foreign buyers to visit Pakistan, the after affects of the nationwide floods in 2010 and 2011 and political instability.
“In the presence of these hurdles such price hike will add more problems to the industry,” he added.
Meanwhile, the business community has severely criticised the increase in the rates of petroleum and non-petroleum fuels without decreasing the high petroleum levies that enrich the government at a time when the economic growth is stagnant.
Sources in the industry have argued that the impact of this latest price will increase the price of domestic and commercial cylinders from Rs 1650 to Rs 1885 and Rs. 6356 to Rs 7265 respectively.
Retail prices are expected to top Rs 160 per kilo. This hike will add salt to the injuries of masses, which are already facing highest ever prices of POL products, CNG prices, prices of per unit of electricity and now with this colossal surge in the base price of LPG by the state owned producers will ultimately jacked up the prices of commodity (LPG) mainly being utilised by the people of remote areas. So now gas prices will further add to the miseries to play.
As like businessmen, the Karachi Transport Action Committee strongly opposed the hike in the prices of petroleum products from February 1. In a joint statement leaders of the committee said that the transporters will be compelled to increase fares in government does not revise increase in POL prices.