The recommendations of the Senate's Sub Committee on Oil Pricing are not being implemented despite a lapse of more than four months. Senator Engr. Rukhsana Zuberi, Member of Senate's Standing Committee on Petroleum and Natural Resources and Member of Sub Committee on Oil Pricing stated this in a press statement issued on Friday.
The sub committee, which is comprised of Senator Ismail Buledi of Muttahida Majlis-i-Amal (MMA), Senator Rukhsana Zuberi of Pakistan Peoples Party Parliamentarians, Senator Rehmatullah Kakar, Engr. Hashmi and Mouhim Khan Balouch of the ruling coalition, held several sessions with the refineries, oil marketing companies and officials of the Ministry of Petroleum. All the members except one who was on an official trip abroad signed the report.
Rukhsana Zuberi said that Minister of Petroleum was fully aware of the success of the sub committee in unfolding artificial price jack ups by the Oil Companies Advisory Committee (OCAC). In March 2005, the Minister of Petroleum while winding up adjournment motions on the increase in oil prices, in the Senate and in the National Assembly, specifically mentioned that 'we may have done mistakes and we will correct them'.
According to her, the petrol price is increased by $35 per metric ton by not adhering to Platt's Oilgram prices. The High-Speed Diesel prices of superior product with 0.5 sulphur, which was imported by PSO cheaper then the OCAC announced price. Average mean of both prices was taken giving additional gain to PSO. Arbitrary amounts as premium for white and black product was added then taking actual price from the journal. Higher freights then prevailing rates are taken continuously.
In 2002-03 budget, 11 percent on HSD, 6 percent on LDO, 6 percent on SK and JP-4 each, was imposed which further aggravated the situation. Pakistan imports only 30 percent of its requirements of HSD, while all other petroleum products demand is met by local production.
This means that the amount collected as duty on 30 percent diesel goes to the government while rest is siphoned away by the refineries with private majority shares, she added. On this inflated price is added oil marketing companies (OMC) and retailers margin (Prior to October 1999 these commission were on the volumes sold but summary presented by the then Secretary Petroleum and present Chairman CBR opposed to increase the percentage commission and based it on value. Further some of the products are added with excise duty and then all the products are added with 15 percent sales tax, she maintained.
To spell out the ground reality of HSD she quoted that OMC margin was enhanced from Rs 0.204 in 1999 to Rs 0.908 per liter denoting an increase of 380 percent, retailer margin by 738 percent from Rs 0.163 to Rs 1.37 per liter, and landed freight by 95 percent from Rs 0.65 to Rs 1.27 during the same period.
Apart from it, the import regulatory duty and general sales tax were imposed by Rs 2.29 and Rs 3.02, respectively, per liter in March 2005. As such the total impact due to increase in the margin of OMC and retailers and due to taxes increased from Rs 1.017 to Rs 8.858 per liter, Zuberi added.
She further stated that the quantum of price increase could be established as Pakistan consumes 9.3 billion liter of diesel and that these increases are completely void of international prices. After several increase since March, the total quantum will considerably increase as of September 1, 2005.
She further said, detailed calculation in each scenario indicate that the price of HSD could be reduced by 25 percent and of other products by 20 percent if the additional factors/duties added after 1999 are removed.
These increases in prices are void of international prices'. In case of diesel if one multiply Rs 7.84 charged extra with total consumption of 9.3 billion liters, the people of Pakistan are charged Rs 50 billion extra in one year, she maintained.
Senator Rukhsana Zuberi said that the price increase between 4.9 percent to 8.9 percent for the next fortnight is again classical example of playing with figures. These percentages are calculated on retail price, while fact is that the price differential on ex-refinery price is between 10 percent to 15 percent which has no co-relation for increase in price of crude oil.
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