LAHORE: The Lahore Chamber of Commerce & Industry and Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel has urged the Oil & Gas Regulatory Authority (Ogra) to change POL price fixation formula as fortnightly change is affecting the estimated cost of doing business and hitting the industry.

The demand was raised by the LCCI President Mian Tariq Misbah at a meeting with the Member (Oil) Ogra Zainulabideen Qureshi at the Lahore Chamber. LCCI Senior Vice President Muhammad Nasir Hameed Khan and Vice President Tahir Manzoor Chaudhry also spoke on the occasion.

“Why the changes in international prices of oil are not reflected in national POL prices”, the LCCI president questioned and hoped that whenever there is ample dip in the price of oil in international market, Ogra would ensure that some benefit must be passed on to general consumers. He said that the government should support the industry when Oil prices increase in the international market and bear some burden.

He said that the upward trend in price of POL products has direct effect on inflation. Keeping in view the challenging economic conditions, the government should lower the share of petroleum levies to give some relief to general public. This step will also play important in lowering the inflation rate that is currently above 8 percent.

Mian Tariq Misbah said that the LCCI is the premier business support organization of Pakistan. It is recommended that a representative of LCCI should be taken on the Board which reviews POL prices and approves the summary to be submitted to government for final endorsement.

He added that some members of Lahore Chamber are running fuel stations and they often complain that if they want to take up any issue with petroleum companies they mostly face stiff challenges due to unprofessional attitude of these companies. Since all the petroleum companies are regulated by Ogra, so, they must be directed to ensure professionalism and fairness in their dealings with clients.

He said that the business community should be given information about the specific role of Ogra, in particular the procedure of opening up a new petrol pump. He asked the Member Ogra about the steps taken by your office to ensure the quality of petroleum products in the country.

The LCCI president also sought information about LNG as the business community keep on hearing the news that Pakistan is forced to buy the costly LNG shipments to deal with the shortfall of gas in upcoming winter season.

Zainulabideen said that the country follows oil price mechanism of Gulf market. The prices are associated with the dollar rate and its fluctuation affects the oil prices. He said that 60 percent oil of the local demand is being imported.

He said that the demand of gas is going up at the rate of 10 to 15 percent annually. He said that 50 per cent of gas demand is being met by the LNG and remaining 50 percent by the natural gas. He added that the gas resources are depleting with the passage of time. He added that the government imposes the petroleum levy while the provinces collect the sales tax.

Meanwhile, FPCCI’s Businessmen Panel, while rejecting the massive increase of up to Rs 5.92 per litre, has urged the government to withdraw the decision of hike in prices of petroleum products, as the move will hit the industry hard.

FPCCI’s Businessmen Panel Chairman Mian Anjum Nisar observed that the burden of the surge in oil price in the international market is immediately transferred to masses by the government but the process of reduction in the prices is always very slow, he noted.

He said that the economy of Pakistan, particularly the SMEs are striving to deal with the post-corona economic crunch and need to get support. Instead of providing subsidies or waivers, it is unjust to overburden the industries with hike in cost of production. An increase in petroleum products costs will further weaken the economic environment which is already under threat on various fronts.

Mian Anjum Nisar said that there is no denying the fact that oil rates have been on the rise in the international market now, but the government instead of passing on this surge to the public, can reduce the number of taxes on petroleum products as the fuel is the engine of growth.

He said that the petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption in the country. Average petrol sales are touching 750,000 tons per month against the monthly consumption of around 800,000 tons of HSD.

The economy is already in a precarious situation, this constant back and forth will only increase volatility, when we ought to be heading for stability, he added.

He said that the cost of doing business and cost of production have shot up to the level of un-competitiveness. The cost of borrowing was huge and capital financing has become more expensive.

He said Pakistan exports cannot compete with China, Bangladesh and India where power tariffs were 7-9 cents, particularly in the post-corona economic slowdown as the country’s exports have been witnessing a major setback in present days due to high cost of electricity, which has become a major stumbling block in industrial development and boosting exports.

He said that fuel and electricity are regarded as the lifeline of any economy and play a pivotal role in socio-economic development of a country.

Copyright Business Recorder, 2021