Daily Times

Belated good news has finally arrived. The revised prices of petroleum products have brought the price of petrol down to Rs 89.91 from Rs 99.97. A deep cut of a maximum Rs 10.46 obviously is seen as a major relief and celebrated accordingly by the PPP government as the Minister of Information Qamar Zaman Kaira along with the Petroleum Minister Dr Asim Hussain made the announcement of the new prices. In line with the international price that has gone down by $ 12 per barrel, the government finally decided to reduce domestic prices. The price mechanism adopted by the Oil and Gas Regulatory Authority (OGRA) is linked to the international oil market. It is another story that the reduction in the international oil price is not always passed on to domestic consumers. Not surprisingly, the news was a hit with the public since petrol prices have across the board effects throughout the economy. When the PPP came to power in 2008, petrol prices in Pakistan hovered around Rs. 62.81. In a matter of four years the prices have shot up a whopping 52 percent. Even by a simple calculation one can perceive the inflationary trend swirling up, and that is exactly what has happened. Now that the price of petrol has come down sharply, one hopes for a corresponding reduction in the prices of other goods and services such as transportation and the electricity tariff. This good news needs further enhancement to become a real boon for the people. In the past four years, the ruling PPP claims to have given Rs 104 billion petroleum subsidy. Who is the beneficiary of this financial support? Obviously, this is less a ‘subsidy’ and more a foregoing of maximum revenue from the petroleum ‘cash cow’. The pump price of petrol carries the petroleum levy and GST, approximately 50 percent of the price paid by the consumer.

This healthy price reduction is seen by many as an election year strategy, and a glossing over of the poor policies that have crippled the energy sector further over the last four years. A good suggestion would be that the petroleum levy and GST, instead of being retained at the maximum ceiling, are brought down to a decent affordable level. Last year the government generated Rs 24.92 billion from the petroleum levy and Rs 38.03 billion from GST. Unless the money generated by these cesses is used on the taxpayers, political mileage sought from the reduction ignores prudent management of POL prices. *