Daily Times

Amid mounting political and economic pressure, the PML-N government has announced a further cut in the petroleum, oil and lubricant (POL) prices for the second consecutive time this year. Already an unprecedented reduction has been made in the POL prices for the last five months. It is a welcome move by the government that it has been passing on the relief of falling international oil prices to the masses. The government was so eager to announce the news that Prime Minister Nawaz Sharif himself made this news public instead of the Oil and Gas Regulatory Authority, which is supposed to make such announcements. In order to stave off strong opposition from the Pakistan Tehreek-e-Insaaf and to win the public support, the PML-N government is exploiting the international trend of sharp decline in oil prices in its favour. The trend also carries some misfortunes for the government. The government is losing a major chunk of revenue due to declining prices of POL products. In order to maintain its revenue collection, the government has resorted to increasing the general sales tax (GST) both times it lowered POL prices. Another factor responsible is ensuring cash flow to meet the IMF conditionalities for repayment of loans, which would be badly affected if less revenue is generated. The government does not want to be cash-strapped that is why it has increased the GST. So, the complete relief of declining POL prices has not reached the masses. Another challenge for the government is to ensure proper supply of petroleum commodities. After the recent petrol crisis, which has jolted the government functionaries, a proper strategy is required to check hoarding and overcharging of this commodity. The present leadership of the ministry of petroleum could not deliver in dealing with the petrol crisis, rather it remained busy in the blame game. In order to avoid such crises in future, the government needs to keep a balance between demand and supply. Another important issue is that the government has failed to decrease inflation so far. The agriculture and transport sectors are two major users of POL products. But the regulation of the transport sector is very difficult. The impact of this reduction is seen nowhere when compared with the prices of daily use commodities. No proper reduction has been made in fares by transporters, who are earning hefty profits. The absence of a considerable reduction in inflation is a major cause of concern both for the government and the general public. It was a common past practice that the rate of everything used to go up with an increase in POL prices, but after massive reduction in POL prices, the same rule is not being followed by transporters and manufacturers. The main sectors among others where the effect of this reduction is missing include agriculture, industry, food and construction.

The government need to take solid measures for passing on the complete relief of this POL price reduction trend to the masses. It must also come up with a strategy to ensure that every sector delivers the benefit of reduced oil prices to consumers. The government should ensure that markets and transporters themselves reduce undue profits. At the government level, honest officials must be deputed to ensure lesser rates of commodities after reduction in oil prices. Market checking committees should monitor any increasing trend in prices. In the transportation sector, fares should be curtailed in the wake of availability of cheaper fuel. People should also adopt a sensible attitude while using the natural resources. If a costly thing has become cheap, its unnecessary use should be avoided. A proactive strategy is also required to deal with any unexpected situation in the international market. If the price of POL can go down in just a few months, it can also go up unexpectedly. The government should be ready to tackle any untoward situation. *