KARACHI, Dec 16: Acting President, Karachi Chamber of Commerce and Industry (KCCI), Mian Abrar Ahmed has urged the government to keep petroleum prices unchanged till June next so that the industries could face the challenges of globalization in post-2005 scenario.

He said seven per cent increase in petroleum prices will bring a negative effect on transportation charges of import-exports cargo, electricity fuel adjustment charges, maintenance cost and the collective effect on the cost of production.

In a statement, he said it would have been prudent if the current policy of absorbing increasing cost continued to prevent blowing impact on the industries, particularly those which are running on diesel power generation and also in view of the fact that international price of petroleum products has eased now.

He expressed surprise over the increase saying that Minister for State Petroleum and Natural Resources had very categorically stated a week before that the Government would not raise the oil prices for next six months ending June 30, 2005.

Abdul Rasheed and Khalid Iqbal Siddiqui of Invest Capital and Securities said the inflation rate for January 2005 will witness the impact of hike in petroleum price. Petrol and diesel hold a combined weight of close to two per cent on CPI basket.

However, the impact of this price rise is more pronounced in its indirect nature. Fuel and Lighting and transport and communication are impacted. Food prices are also affected to an extent because of price hike in diesel, they said.

Murad Ansari of Khadim Ali Shah Bukhari Securities said that the government's taxes on petroleum prices remain at zero whereas the oil marketing companies are the major beneficiary of this price increase.

He calculated an inventory gain of Rs477 million for PSO and Rs174 million for Shell as a result of latest price increase. He said that upward revision in prices came as a major surprise as most of the statements coming out were indicating that the government would maintain oil prices till June 2005.