KARACHI, Oct 3: Shell Pakistan will press for an increase in government commissions on petroleum products to 4 per cent from the current 3.5 per cent because the rise is vital for investment, Shell Pakistan Chairman Farooq Rehmatullah said on Thursday.
The Ministry of Petroleum has hinted that it wants to cap the commissions, or ‘margins’, at 3.5 per cent but Rehmatullah told a news conference he would hold talks with the new government to press for an increase because 4 per cent commission was promised under the deregulation road-map.
“The commissions in Pakistan are the lowest in the world,” Rehmatullah said, citing other parts of Asia where commissions range between 6 to 20 per cent.
He said higher commissions will encourage companies to increase investment in infrastructure in Pakistan which is insufficient because of a tightly regulated market in the past.
He also questioned the government’s interference in the oil pricing mechanism under which oil companies set petroleum products’ prices every fortnight.
In the case of gasoline the petroleum products tax was reduced to 48 per cent from 55 per cent and for diesel it was reduced to 23 per cent from 27 per cent, he said.
“Our advice to the government is to that if you have agreed on a process, you should not be interfering and allow the oil companies to manage the system,” he said.
Rehmatullah also said his company has been in talks with the Finance Ministry and the Privatization Commission to open the private power market to independent oil companies after Pakistan State Oil is privatized.
He said his company has paid $11.3 million as part of a $32 million investment it plans to make in the Pak-Arab Pipeline Co. which is building an 817-km petroleum products pipeline from Karachi to Mahmood Kot in central Punjab province.—Dow Jones News Wires
