KARACHI, May 13: The Tehrik Shehri Hukumat has criticized the petroleum products de-regularization policy under which petroleum prices are revised (usually upwards) after every 15 days. Addressing a press conference at the Karachi Press Club here on Friday, Mirza Jawad Baig, chief of the organization, demanded that dissolution of the Oil Companies Advisory Committee (OCAC), abolition of various levies and taxes, and other measures towards bring down the petroleum prices to a reasonable level.
He observed that the OCAC protected the interests of only oil marketing companies. Therefore, he said, the government should dissolve it and revert to the old practice of fixing prices of petroleum products by itself.
Mr Baig, also the founder president of the Pakistan Petroleum Dealers Association, suggested that instead of adopting indirect way, the policy of direct taxation be adopted in the case of petroleum products whereas the compound taxation (tax over a tax) be done away with. Various surcharges, presently levied on the petroleum products, should also be withdrawn, he added.
He said that the distribution margin of the oil marketing companies, which had risen to 7.5 per cent in the year 2001–2002, be reduced and brought to its earlier level of 3 per cent. Another option, he said, could be to bring the margin at par with that in India, where the distribution margin was 3.5 per cent.
Mr Baig said that dealers’ commission should be fixed by the government, as was in practice till the year 2002, and brought down to a reasonable level because the 3.5 per cent or Rs1.50 being charged by dealers appeared to be very high. Referring to the rate of commission in India, he said that the fixing of commission was the government’s prerogative and at present the rate stood at Rs0.65 per litre, irrespective of price change.
He said that petroleum development levy, which had been increased by 100 per cent between 2001 and 2004, should be rationalized and lowered.
Pointing out that whenever the prices of the petroleum products changed (enhanced), the oil marketing companies, dealers, and other stake-holders would start selling the products already stocked at previous rates, at the revised prices, making windfall profits. He suggested that old stocks should be sold to consumers at old rates.
He also suggested that all taxes and surcharges be levied at the basic petroleum prices. Owing to compound taxation, one tax is levied and added to the price, then another tax is levied and calculated at the price that includes the older tax also. This way, the consumer is made to pay tax over tax.
He said that the policy of price equalization only in respect of petroleum products should be done away with immediately and the prices of petroleum products in different cities be fixed by adding actual primary freight charges up to those places, as could be seen in India where prices of petroleum products vary from state to state.
