May 3, 2005	Tuesday	Rabi-ul-Awwal 23, 1426

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ISLAMABAD, May 2: The Senate’s Standing Committee on Petroleum and Natural Resources is reported to have asked the government to introduce a four-pronged strategy on petroleum deregulation and to involve parliamentarians in the process of fixing oil prices by the Oil Companies’ Advisory Committee (OCAC).

The committee, headed Senator Dilawar Abbas of the Pakistan Muslim League, has proposed to the government to introduce a daily-pricing system of petroleum products, reduce the number of petroleum depots from 29 to eight and reduce general sales tax and petroleum development levy (PDL) on every POL item.

“If implemented, the recommendations of the committee would aggravate the situation, multiply problems and create a mess, instead of addressing complaints about the pricing mechanism,” a senior petroleum ministry official told Dawn.

The official said the ministry would have no objection if parliamentarians were made part of the mechanism being administered by the OCAC. He said the relevant sections of the petroleum ministry had been asked to examine the proposals in detail, keeping in mind the overall deregulation parameters. Generally, he said, the implementation of these proposals would result in different prices in different areas of the country and far-flung areas would be at a great disadvantage owing to transportation factor.

The official was of the view that the daily pricing formula was impractical because the general public would not be able to know whether a specific dealer was selling POL products at the prescribed price.

“It would require a detailed study to see how badly the consumers would be affected given their distance from major supply points like Karachi or Multan, and there would be no check to ensure if the price fixing on a specific day is being adhered to by the dealers.”

Similarly, on the question of reduction in the number of depots, big supply depots like in Karachi and Multan or where it was being transported through a pipeline would have an advantage, but under-developed areas would come under severe strain and push rural areas into poverty.

On the question of reduction in taxes, the official said the government was currently not charging PDL on any POL product and hence the question of reduction in PDL was unjustified.

As far as the general sales tax is concerned, he said, if the policy decision was taken to reduce GST, the CBR would be required to issue a number of statutory regulatory orders for every item and then seek parliamentary approval. The matter, he said, would need to be discussed at length with the Central Board of Revenue.

Senator Dilawar Abbas was not available for comments on repeated contacts.