SMEs shocked over hike in petroleum prices despite cut in world market

The All Pakistan Business Forum (APBF) has rejected the recent increase in prices of petroleum products, as despite a decline in the international market, the government has increased the prices of petrol and high-speed diesel which is unjust and unfair. The APBF appealed the government to bring down the prices of utilities to the regional competitors besides lowering interest rate which is also very high when compared to the other countries.

APBF President Syed Maaz Mahmood remarked that at a time of unsatisfactory export volumes and low industrial growth, the hike in oil products along with constant raise in electricity and gas tariffs for the industry, especially for the SMEs, was really surprising. If the decision is not withdrawn, it will prove dangerous for the country’s SME sector, he stressed.

The average prices of petrol and HSD decreased in the international market by about $1.5 and $2.5 per barrel, respectively, after October 15. The average price of petrol had dropped to about $76 per barrel from about $77.5. The price of HSD also declined to about $84 per barrel from $86.5 in the last fortnight.

He said that the businessmen were hoping that the prices of petroleum products would go down, but the government increased the rates to offset inventory losses incurred by oil companies after the last price revision on October, saying the massive jump in electricity base rates and petroleum products prices would make local products uncompetitive in the international market.

The APBF Chairman Ibrahim Qureshi observed the move came as a surprise as experts were hoping for a reduction in the prices of petroleum products.

According to an official announcement last week, the price of petrol has gone up by Rs1.35 and that of diesel by Rs3.85 per litre.

Until November 15, the ex-depot petrol price will be Rs248.38 per litre, up from Rs247.03, and diesel Rs255.14 per litre, up from Rs251.29.

The prices of light diesel and kerosene have been reduced by Rs2.61 and Rs1.48 per litre, respectively.

In announcement, the Ministry of Finance said the petroleum regulator, Ogra, had worked out the prices based on the variations in the international market.

However, the fact is that the government had retained a part of the increase in rates due on October 15, hoping that the following quarter would be cheaper.

However, this resulted in inventory losses to the oil companies, which also protested against the government.

The international prices subsequently came down, but the backlog was on the higher side, forcing the government to increase the prices for the next 15 days.

During the current fortnight, the import premium on both petrol and HSD remained generally stable at $8.7 and $5 per barrel, respectively. The exchange rate also stood its ground.

At present, the government is charging about Rs76 per litre tax on both petrol and HSD. However, the general sales tax is zero on all petroleum products.

APBF President said that the government is charging Rs60 per litre petroleum development levy on both products that normally impact the masses. It also charges about Rs16 per litre as customs duty on petrol and HSD, irrespective of their local production or imports.

In addition, about Rs17 per litre distribution and sale margins are going to oil companies and their dealers.