March 24, 2003	Monday	Muharram 20, 1424

Several hundred truckers went on strike in the city on Monday and spilled their oil on the streets and threatened a far wider strike against the 6th oil price rise in the country within 11 weeks.

While some airlines increased their fares and Wapda proposed to increase its power rates by the end of the month, the oil truckers wanted the abnormal increases in the diesel price to be withdrawn, saying enough was enough.

While the POL prices have bee raised fortnight after fortnight for the last six fortnights, the latest price rise of 3 to 4 per cent in POL prices came at a time when the world prices had come down to $27-$28 a barrel from the earlier peak of $40. In fact, as the tankers went on strike they were told by the TV the world oil prices were at their lowest in three months.

Oil prices went up earlier fearing the adverse fall-out of the US attack on Iraq, but soon came the consensus the war would be short and the oil supply system will not be destroyed.

The US Secretary of State, Colin Powell, also came up with the assurance to the oil companies that if a war broke out the US would release supplies from its very large strategic oil reserve to hold the oil prices down and reduce the damage to the world economy.

While the Opec oil ministers had earlier decided not to lower their output quota, Saudi Arabia and other Gulf oil producers said they would increase the oil output to hold down oil prices and ensure adequate oil supply to the world. The long closed oil wells of Venezuela had also resumed supplies.

Sustained increase in POL prices in Pakistan are not acceptable to the consumers and transporters at such a time of declining world oil prices because of its multiplier effect on prices as a whole, beginning with instant higher transportation rates and ending with higher power rates with their own cost- push effect all round.

Although the Oil Companies Advisory Committee was announcing one POL price rise after another since January 1, it was not the oil companies which were gaining as their rates of profit are fixed but the government through its high petroleum surcharge.

And the surcharge which is to be Rs45.5 billion this year (Rs60 billion inclusive of the gas surcharge) is not fixed in terms of rupees per litre, but in terms of per centage of the cost of the ex-refinery product which is around 100 per cent. Add to that, the sales tax of 15 per cent over the enhanced price of oil. So that hits the consumers multiply hard.

But the government feigns innocence and attributes the stiff rise in POL prices to the rise in world oil prices. The government received Rs39 billion as petroleum surcharge last year and this year it is to get Rs45.5 billion as surcharge and more. So the advisor to the prime minister on finance, Shaukat Aziz, says the oil revenues have been far larger and is delighted.

In addition, Pakistan has been receiving a billion dollars worth of oil from Saudi Arabia since 1988 when it exploded its nuclear devices and was brought under nuclear sanctions by the western world and Japan. The actual amount of this Saudi oil facility has been varying along with the variation in the price of oil. This year it is said the cost of the oil may be $1.3 billion in view of the higher world oil prices.

The benefit of this grant is not passed on to the people even partially nor is that publicly accounted for. So while the government gets richer by this process, the people have been getting poorer by the ever rising oil prices at home. And that is very unfair. Apart of that, benefit should be passed on to the people at times of very high oil prices.

Bus and taxi fares have gone-up on the basis of higher POL prices. They no longer wait for the government to fix the tariff. Particularly the truck-owners who transport food supplies and other essential items. They keep on pushing up the rates as oil prices go up. And they do not bring down their rates as the oil prices come down. In fact, while the increase in POL prices is substantial, the cut in oil prices when world prices fall, is nominal and the consumers feel doubly cheated.

The worst is the case of water tankers. Too many persons in the city depend on water supplied by tankers as their pipelines are invariably dry. And their rates for 2,400 gallons of water in a few years has gone up from Rs250 to Rs 450 to Rs 500. It is bad enough they have been denied potable water through their pipe line and they have to pay heavily for the tanker water which is pretty risky to positively hazardous to consume.

And as their rates go up along with the rise in POL prices they never come down after the oil prices drop down. The latest increase is by Rs50 per tanker and it will not come down later. The consumers will be told the cost of maintaining the tanker had gone up in other ways. It is a chaotic way of living and paying. In spite of all that we are told we have a low inflation rate and it is getting better all the time.

We are told there is no petroleum surcharge on the fuel oil used for producing energy. And yet WAPDA and the KESC have been protesting against the very high price of fuel oil and the heavy losses they have been incurring. And when ultimately the power producers are allowed to raise their rates prices of all products and services where power is used go up, aggravating the inflation.

Luckily for the government, the IMF and the World Bank approve of the stiff petroleum surcharge so as to boost its revenues. The IMF and the World Bank are more concerned about increasing the revenues and lowering the budget deficit than the welfare of the citizens.

Of course, higher fuel oil prices make Wapda and the KESC incur large deficits and have perennial cash flow problems. The IMF then asks the government to help the power producers who have to pay the higher cost of fuel oil to the independent power producers as well whose power they buy at agreed prices.

When power costs more and so does water and the cost of the products made by Pakistani industries goes up. Export problems arise, while smuggled goods beat the Pakistani products in home market.

The government has to take all these factors into account while managing the economy instead of thinking only of higher oil revenues. It is a head-I-win and tail-the-consumers-lose policy which the government is adopting mindlessly and ought to change now in favour of a more balanced and realistic policy.

The people of Pakistan are told of the over $10 billion foreign exchange reserve Pakistan has built up for the first time. They are told of the 148 per cent rise in foreign investment this year over last year and the rise in home remittances in the first eight months of this year to $2.847 billion compared to less than one billion dollar in a whole year until recently.

And if along with all that and the generous Saudi oil facility, they see POL prices shooting up and up at a time when they are going down around the world — the lowest in three months— they are too baffled and feel they are being taken for a ride by the government, as they had been by successive governments with their tall promises and scanty deliveries. And now the price of gas too is to go up following the rise in the price of oil as the two are inter-linked for foreign petroleum companies operating here.