July 4, 2002	Thursday	Rabi-us-Sani 22,1423

KARACHI, July 3: After Lever Brothers some other ghee and cooking oil producers have also raised prices by Rs10 per kg following the levy of 15 per cent general sales tax (GST) at the factory level.

An official in Wazir Ali Industries, makers of Tullo brand, said the company had increased prices and the new retail price of five kg ghee tin had been fixed at Rs395 as compared to pre-budget price of Rs340, while the 2.5 kg tin was now tagged at Rs205 as compared to Rs178.

He said the company had started distribution of its products with new enhanced price tag and new rates would be applicable in a couple of days.

An official in Habib Cooking Oil said the company had not increased prices yet, but the decision to enhance prices would be taken in a day or two as meetings to calculate the real impact were going on.

The maker of Soya Supreme, whose official asked not to be identified, said the company was considering absorbing some of the impact of GST because of thin offtake of ghee and cooking oil by consumers even at old rates. He said the company would raise prices by Rs6-7 per kg instead of Rs10 as increased by other packers.

Despite increase in prices by the manufacturers, retailers have been taking time to pass on the impact to the consumers owing to what they describe as a laggard market conditions, forcing them to avoid any upward price move.

Retailers of various areas like Saddar, F.B. Area and Tariq Road said almost all the packers had surged the prices soon after the budget but lower demand from the buyers even at old rates had made them hesitant to charge new price.

“Consumers cannot afford to pay higher prices that is why we are bound to sell ghee products at old prices,” retailers said, adding that they will be bound to charge new prices as soon as the old stocks deplete in the next few days.

Lever Brothers was the first to increase the prices by Rs10 per kg on its various ghee and cooking oil products and their new rates have already become effective.

Pakistan Vanaspati Manufacturers Association (PVMA) chairman Haji Mohammad Akhtar told Dawn from Peshawar on Wednesday that the multinational ghee producers had raised the prices by Rs10 per kg as compared to Rs5 per kg made by local companies.

If per kg cost is calculated after an increase of Rs10 per kg, multinationals are now charging Rs79 per kg (Rs395 per five kg tin), while local millers are selling ghee and cooking oil at Rs50-52 per kg, he said.

“The government had promised the PVMA for reducing the import duty on palm oil in case the GST is levied in the budget 2002-03 to offset the burden on consumers in shape of any price flare-up,” he said, adding “the government has not fulfilled its commitment.”

He urged the government to cut the import duty on palm oil so that the impact of GST could be offset.

Besides the GST issue, the PVMA is taking up the case with the government regarding direct filling of palm oil by large number of producers in various capacity of tins. These unregistered ghee millers are marketing the palm oil as ‘ghee’ without processing it, which is harmful to health.

He said around 1.25 million tons of edible oil were being imported annually by the ghee and cooking oil producers out of total requirement of two million tons, but interestingly 750,000 tons of edible oil, produced from cotton seeds and imported seeds, were reported to have been directly filled in ghee tins without undergoing any processing by a large number of millers.

Meanwhile, Consumer Protection Council (CPC) has strongly protested the levy of GST on ghee and cooking oil, urging the government to immediately withdraw it.

CPC said that ordinary citizens were already burdened with inflation, high cost of living and utility prices, and the imposition of 15 per cent GST would further hit the poor citizens.

As prices of ghee and cooking have risen, ordinary consumers would be forced to buy loose oil and ghee and other sub-standard low priced brands, which do not conform to the Pakistan Standard and Quality Control Act (PSQCA).

Most of the low quality brands are manufactured by the un-regularized and un-registered sectors who do not pay any government taxes. As such the levy of GST on edible oil will increase the tax evasion by the manufacturers of spurious brands, CPC said.