Business leaders on Saturday told the media the massive price hike of petroleum products would further increase the amount of inflation in Pakistan, increase the problems for the common man, and create severe issues for the industry due to the unbearably high cost of doing business.
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Petroleum Price Hike
The business community has criticized the caretaker government that they should have kept the prices of petroleum the same as before due to the falling landing cost of imported crude on account of the constant rise in the rupee’s strength against the dollar in the last eight interbank sessions despite the rise in prices of crude oil prices in the world market.
The government had raised petrol and diesel rates by 8.5pc and 5.6pc, respectively, on Sept 16.
The President of the Federation of Pakistan Chambers of Commerce and Industry Irfan Iqbal Sheikh, in a statement, explained that the rupee closed at 296.85 for a dollar in interbank on Friday, reflecting more than Rs10 to a dollar gain which touched Rs307.10 on Sept 5, this was a great recovery for the Pakistani rupee compared to the dollar.
The CEO fondly recalled how the top chamber had repeatedly tried to get the authorities’ attention in the past few months regarding various issues related to importing Russian crude oil.
They had pointed out concerns about handling oil shipments, improving refining processes, and simplifying the procedures for oil payment transactions.
Sadly, the authorities didn’t take the FPCCI’s advice seriously. Consequently, the country missed a significant opportunity to obtain Russian crude, which is currently a whopping 40% cheaper compared to international market prices.
In acknowledgment of the State Bank’s decision to maintain the current key policy rate, Mr Sheikh said the trade and industry were looking for a discounted and regionally competitive export finance scheme (EFS), long-term financing facility (LTFF), and temporary economic refinance facility (TERF) rates to be up there with the economic instability, cost of doing business and restoring competitive equilibrium in its exports.
Differing Perspectives on Petroleum Price Increase
Giving a different view on this point, Pakistan Business Council (PBC) chief executive officer Ehsan Malik said that with an increase in the global cost of fuel and our high degree of reliance on imports, revision of price was not possible.
However, even after the latest increase, the price per liter of petrol at Rs331.38 and of diesel at Rs329.18 in Pakistan which is still lower than in India.
With the present pressure on both the current and fiscal accounts, he stated that “we can’t afford to lower taxes to buffer the impact of the rising global cost of fuel.
Besides this, we have commitments to the IMF to deliver,” Mr Ehsan said.
The President of the Karachi Chamber of Commerce and Industry (KCCI), Mohammad Tariq Yousuf in a statement, said it has become almost not possible for industrialists to run the industries at such high costs.
This was the fourth consecutive hike in petroleum prices whereas, during the tenure of the caretaker government alone, the petrol price increased by more than Rs58 per liter, which has already increased problems for the already weak economy as the production has been affected by many industrial units to a great extent due to high cost.
Public and Business Concerns
The general public was already overburdened because of the recent increase in electricity tariffs. This was made worse by the very high increase in the cost of petroleum and its products, which has triggered severe anxiety not only among the common man but also the business and industrial community.
Given the economic crisis being faced by Pakistan, the government has to take tough steps to generate the required revenue to overcome costs and fulfill international commitments.
However, instead of taking these steps back-to-back, the government should implement some kind of effective strategy to ensure some relief to the people and the industry who will not be able to bear the brunt caused by consecutive price hikes.
Tariq Yousuf stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the rising petroleum prices and electricity tariffs would continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment, and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the poor poorer due to unbearable inflation.