FPCCI for withdrawal of oil price hike as decision to hit industry hard

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ISLAMABAD:   (Parliament Times)   The Federation of Pakistan Chambers of Commerce and Industry has urged the government to withdraw the decision of hike in prices of petroleum products, as the move will hit the industry hard.

In a statement issued here today, the chief of apex body of all Chambers & Trade Associations Mian Anjum Nisar called for withdrawal of unwise and anti-industry decision. “In response to the demand of business community, the government gave the industry a gift of fuel price hike on the eve of Eidul Azha, contrary to general expectations that the prices would be maintained in the wake of last month’s big jump of about 66 percent,” FPCCI President Mian Anjum Nisar said.

He observed that the last month’s step had taken the trade and industry by surprise because it was out of schedule and was not prompted by any summary moved by the Oil and Gas Regulatory Authority, which was the legal procedure.

He argued that 6.25 percent drop in interest rate in recent days have started to cut cost of production and bolster the debt repayment ability but the decision of hike in oil products’ prices for the second successive month will fade away the all relief announced by the central bank earlier for the business community.

He said the business community was already facing severe problems due to destruction of COVID-19 and in such a situation making hike of almost 70 percent in the prices of petroleum products in two months period is unjustified. He said that the price of crude oil in the world market is still around $43 per barrel and as per calculations the ex-refinery price of patrol is worked out at around Rs50 per litre but the government increased the rate of petrol to more than Rs104 per litre, which is great injustice.

Why is the government reversing its decisions? 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.

The FPCCI had praised the SBP positive move of relief in mark-up rate, easing the impact of the coronavirus’ shock on growth but the move of continued hike in petroleum rates would seriously harm the trade and industry, he added.

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.

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 if fuel would be heavily taxed, the entire economy would suffer unprecedentedly, as the government continued to charge Rs30 per litre petroleum levy on petrol and diesel, besides charging 17 per cent general sales tax (GST) on all petroleum products.

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.

Mian Anjum Nisar said that industries need low cost energy to bring down their cost of production, keeping their goods competitive in the international market. He said that the FPCCI was expecting that the government, in present circumstances would reduce the price of electricity in proportion to the cut in the prices of petroleum products to bring down the cost of doing business and to promote industrial activities.

He said that due to the COVID-19 pandemic, business activities were already in decline and in this situation the government should take serious steps to cut the cost of doing business, as hike in oil rates would further enhance the cost of production, making transport more expensive.