| Welcome to Global Village Space

Friday, April 12, 2024

Hike in Petroleum product has put a question mark on targeted beneficiaries?

News Analysis |

The caretaker government has decided to increase the prices of petroleum by Rs 14 in the month of July to rake in additional Rs73 billion. To ensure the profits for the oil refineries, additional duty worth Rs5 billion will be charged.

Increase in the cost of doing business will further hamper the exports, making it difficult to bring in more dollars to benefit falling rupee.

The hike in price has led to profits of Rs20 billion to the oil marketing companies, who were paid on June 25.   The 26paisa margin was increased to provide additional profits to oil marketing companies and dealers. Moreover, the Federal government has introduced the 13% regulatory duty on high-speed diesel and 5% customs duty on petrol.

In addition, for the delivery of petrol inland freight equalization is receiving Rs3.91 and Rs1.55 for high-speed diesel.

Read more: Price of petroleum to hit highest point in three years

Though the certain lobbies had suggested the increase of Rs8 per liter in high speed diesel prices, the intervention from the finance minister Shamshad Akhtar was instrumental to not to increase the prices more than Rs6 per liter.

Ali Zafar, the caretaker information minister has argued on Sunday that increase in petroleum prices was inevitable and a bitter decision which interim government had to take.

Since the interim government was aware of the fact that record surge in the price may result in a reactionary order from Supreme Court, to cut the prices. Therefore, it kept the prices high enough to accumulate as much revenue as profit in short span of time.

The interim government had explained its decision to increase the prices. According to the notification issued by the caretaker government, the worsening economic conditions of the country are the reason for the price hike.

Read more: Businessmen term fuel price hike ‘bad move’ for PML-N

But, it will put the masses living on the edge in jeopardy as the cost of eatables and other commodities has surged quickly. Moreover, increase in the cost of doing business will further hamper the exports, making it difficult to bring in more dollars to benefit falling rupee.

It blamed the deteriorating exchange rate which has put pressure on the Pakistani rupee.  The rupee devalued by over 15% since November 2017 reaching 124 in the open market on June 20. Though, after dipping to 125, it has gained some value. The price of 1 USD to PKR buying is Rs 123.95 selling of US Dollar is RS124.50.

The rupee is depreciating, money is going out of the country, and the stock market is plunging. In this dire economic situation, with extravagant spending of PM-N government in its last few months, exchequer is struggling to cope with the expenses. It may have forced the interim government to take this decision. But, the accusation of foul play which is benefiting the petroleum lobbies and connected groups must be investigated.