KARACHI: The Panel of Businessmen of the Pakistan Federation of Chambers of Commerce and Industry (FPCCI) rejected the increase in the prices of petroleum products for the second consecutive fortnight before Eid-ul-Azha, a statement said on Saturday.
The government has authorized a price hike for petroleum products and liquefied petroleum gas (LPG) at a time when headline inflation in Pakistan is still in the upper range of around 10 percent, they added.
The Chairman of the FPCCI Businessmen’s Panel, Mian Anjum Nisar, who is also the former chairman of the FPCCI, said the sharp rise in oil prices before Eid was unwarranted, saying he This was another mini-budget for trade and industry, which was already stuck in the quagmire of inflation. and facing high production costs.
After the increase, the price of gasoline jumped to Rs118.09 / liter from Rs112.69 / liter, the price of high speed diesel rose to Rs116.53 / liter from Rs113.99 / liter, the price of kerosene increases to Rs87.17 / liter, against Rs85.75 / liter, and the price of light diesel has increased from Rs83.40 / liter to Rs84.67 / liter.
Nisar said oil prices and inflation are closely related in a cause and effect relationship. As fuel prices rise, inflation, which is a measure of general price trends across the economy, moves in the same direction. If fuel prices drop, inflationary pressures start to drop.
At the beginning of this month for the first half of July, the government had also increased the prices of gasoline by Rs2 / liter, diesel Rs1.44 / liter, kerosene Rs3.86 / liter and that of LDO Rs3.72 /liter.
He said that today the price of Brent was almost the same as in August 2018, when the government took office. But now, in the local market, the prices of petroleum products are higher than three years ago. In August 2018, when the Brent oil price was $ 75.5 / barrel, the local market price of diesel was Rs 112.94 / liter; gasoline, Rs95.24 / liter; kerosene, Rs 83.96 / liter; and light diesel, Rs75.37 / liter. Now, when the price of Brent is $ 74 / barrel, petroleum products are dramatically high with gasoline being sold at Rs 118.09 / liter; diesel, Rs116.53 / liter; kerosene, Rs 87.14 / liter; and LDO at Rs84.67 / liter.
The government also levies a general sales tax of 17 percent on all petroleum products. In addition, the government also collects an oil tax on these products, which is levied directly on consumers, he added.
Condemning the rise in the rates of petroleum products, the former president of the FPCCI called for reducing the tax rate on petroleum products to support trade and industry, while the government imposed oil levies and a sales tax very high on petroleum products.
Nisar said that in order to improve business cash flow at this critical time, the government will need to ease the industry by lowering the tax rate on all items, including petroleum products, in addition to lower the mark-up rate, as the country economy is going through a difficult phase of the post-Covid-19 pandemic.
At a time when the country’s GDP ratio was very nominal, amid the high cost of doing business, the industry needs maximum support and relief, he said, adding that the economy of Pakistan has been severely affected by the coronavirus, as industries, in particular the Small and Medium-Sized Enterprises (SMEs) struggle to cope with the post-coronavirus economic crisis and need support.
Instead of granting subsidies or waivers, it is unfair to overload industries with increased production costs, he said, adding that an increase in the costs of petroleum products would further weaken the economic environment, which was already threatened on various fronts.
The BMP Chairman said that high speed diesel is mainly used in the transport and agriculture sectors; therefore, any increase in its price will result in an inflationary impact. The price of light diesel has also been increased, which is used in industries.