ISLAMABAD: Pakistanis finally received good news among the piles of bad reports especially of increasing inflation as Prime Minister Nawaz Sharif Friday announced reduction in the prices of petroleum products up to Rs14.68 per litre.
Customs Today has another feather in its cap as this leading community newspaper was first to break this news of reduction in petroleum, oil & lubricant (POL) prices even before Eid.
The announcement was made by the prime minister while addressing a special meeting of the federal cabinet in the federal capital yesterday (Friday). He said the government was drastically reducing petroleum prices despite the country is facing huge economic losses due to prolonged sit-ins.
This is the single largest reduction in prices of petroleum products in about 10 years. The crude prices in international market have fallen below $86 per barrel during October from $98 per barrel at the end of September and $104 per barrel in August.
On the other hand, the move is seen as a bid to stave off mounting political and economic pressure on the embattled PML-N-led federal government.
The hastily crafted pricing strategy – coinciding with this week’s heavy fluctuation in global oil prices – offers consumers price cuts of up to Rs14.68 per litre.
The highest cut was seen in the price of HOBC by 14.68 per litre, which is largely used by luxury cars. Other petroleum products such as petrol, HSD and kerosene oil were lowered to a significant level. The price of petrol has been slashed by Rs9.43 per litre. This is the third consecutive price drop for petroleum in as many months.
NOT SO POSITIVE AFTER ALL
The government charges 17 per cent GST on petroleum products and it would be losing a major chunk of revenue due to the cut in oil prices. At the same time, it collects Rs20 billion on account of GST and Rs10 billion on account of petroleum levy (PL) every month. “The government will lose around Rs1.5 billion in revenue due to the decrease in oil prices during November,” said an official at the petroleum ministry.
The transport and agriculture sectors are also among major users of oil and oil price cuts would facilitate the farmers and consumers. But, the regulation of the transport sector is very poor and people are not hopeful that they would be given a major relief in fares. In remote areas, petroleum dealers are also out of control of the oil regulator and oil marketing companies as they overcharge consumers.
According to experts, the tussle between the US and Russia over Ukraine issue appears as a major reason behind the cut in oil prices, while OPEC giants like Saudi Arabia and Kuwait did not reduce their production to push oil prices.
However, amid this entire tussle between the giants, developing countries like Pakistan will benefit from this decline in oil prices. Pakistan is an oil importing country and pressure on its foreign exchange will also ease due to the price cut.
Similarly, Pakistan also relies on fuel when it comes to power generation and a drop in oil prices will lead to a reduction in power prices. Currently, the government has been keeping power production at a low level to avoid subsidy — reduction in oil prices is likely to encourage the government to enhance power production. However, experts believe that it will depend on lowering of oil prices for a longer time.
Meanwhile, public widely welcome the cut in POL product price but they said that there are lesser chances they would get any tangible benefit of this huge reduction.
