ISLAMABAD, July 21: The oil industry is resisting a move initiated by some parliamentarians and the petroleum ministry to contain rising prices by withdrawing some duties and restricting other charges.

Sources told Dawn that Senator Rukhsana Zuberi and the petroleum ministry had given presentations to the finance ministry on anomalies in the oil pricing mechanism.

The finance ministry agreed in principle that the current system of allowing deemed duties on oil products to the refineries and dealers’ commission and companies’ margin as ratio of POL products was not justified.

During a briefing, Prime Minister Yousuf Raza Gilani authorised the senator to hold consultations with all the stakeholders and asked the petroleum ministry to assist her in preparing detailed proposals.

It was agreed during the consultations that the government should do away with the deemed duties and restrict dealers’ commission and companies’ margin at a certain level, instead of allowing it as a percentage of product price. It was noted that the charges automatically rose with an increase in international prices and the companies earned unjustified profits while the sale price became unbearable for consumers.

Anomalies were also found in the allowing petroleum differential claims to the oil companies.

The sources said that officials of the petroleum ministry and Senator Zuberi met representatives of oil companies and refineries on July 18 but the industry did not agree to the proposals.

The senator said the ministry would submit a case immediately to the prime minister for necessary corrections. She said the deemed duty at 6-10 per cent on different products was unjustified and it had resulted in about 200 per cent increase in the profitability of refineries. She said the refineries earned Rs1,200 per ton on some products when these duties were first introduced in 2001,but it had increased to over Rs9,000.

She said the commission allowed to the oil companies and dealers in percentage terms should be replaced with a fixed amount.