KARACHI, June 6: As the government is set to announce budget on June 9, the manufacturers of 16-kg ghee tin have again raised the price to Rs1,325, from Rs1,275 last week, owing to persistent increase in international prices of palm olien.

On May 1, the 16-kg tin was being sold at Rs1,180 and Rs1,030 on January 1, 2007.

Packers of 2.5 and five litre/kg ghee and cooking oil had already made four increases since September 2006. Consumers had seen the last hike in branded ghee in May 1.

In September 2006 a five-kg Dalda tin was priced at Rs395 as compared to Rs498, showing a rise of Rs103 per five kg tin in just seven months.

A ghee packer said that in Lahore the 16-kg ghee tin was currently priced at Rs1,365 while the rate of palm olien in the local market is Rs2,800 per maund.

The international prices of palm olien, the main raw material for manufacturing of ghee and cooking oil, rose from $462 per ton in July 2006 to $805 per ton in early May 2007 and currently it stands at $905 per ton. This has resulted in higher rates of sales tax and import duty thus making vegetable ghee and cooking oil more expensive in the local market.

Despite frequent increase in edible oil prices at domestic level, the government has been reluctant in cutting import duties and taxes owing to revenue constraint. However, the Indian government had reduced the import duties twice in the last few months to offset the impact of high palm olien rates on local prices. The government appears now more interested in giving an additional subsidy on ghee and cooking oil available at the utility stores.

Prime Minister Shaukat Aziz in March this year had announced that at least 20,000 tons of ghee and cooking oil would be sold per month at the utility stores, but the target had not been met yet.

A ghee packer said that only 6,000-7,000 tons of ghee and cooking oil was being sold every month through the utility stores, which means that a very low population has been benefiting from this facility.

Senior Vice President of Pakistan Vanaspati Manufacturers Association (PVMA) Abdul Waheed told Dawn from Islamabad that only one to two per cent of the population out of 160 million people purchased subsidised ghee and cooking oil from the utility stores.

He added that the government was planning to give more subsidies on ghee and cooking oil available at utility stores thus ignoring the majority of consumers who buy from regular stores.

However, officials in the Utility Stores Corporation (USC) claimed that 30 per cent of the population had been purchasing their kitchen items from the 1,000 utility stores across the country.

They expected that their market share would further improve after opening of new stores, franchise and mobile stores in next few months.