KARACHI, May 9: The Oil Companies Advisory Committee (OCAC) is trying to prepare a case for price hike in POL products in coming fortnights and has issued a lengthy statement giving the impression that the burden on the government and oil industry is rising due to increase in international prices, market sources said on Monday.

The latest statement has almost the same tone but with the different figures and statistics contrary to the press conference held by the OCAC secretary general on March 10 in which he tried hard to defend the POL price hike. After that press briefing the OCAC had raised the petrol price by Rs1.57 to Rs45.53 from Rs43.96, while oil marketing companies (OMCs) had increased the diesel price by 85 paisa to Rs29.06 from Rs28.21 per litre on March 15. Later, the committee had kept the POL price unchanged on March 31. In April, the OCAC had not made any changes in the POL prices.

Market analysts are of the opinion that the OCAC’s latest statement ahead of its May 15 price review holds a lot of interest that it may again apply the same strategy in raising the prices.

“The Monday’s statement has nothing to do with the March 10 press briefing,” OCAC General Secretary Abid Saeed Ibrahim told Dawn, adding that there was no link between the two. When asked whether the OCAC was intended to raise prices on May 15, he said that much depended on the calculation based on oil price movement during May 1-15 compared to the previous fortnight.

He dispelled the impression that the committee had deliberately kept the POL prices low especially for diesel in view of declining trend in global oil price.

On a proposal regarding to daily price fixing of POL prices, he said that the OCAC had offered the government to relieve it from reviewing the POL prices fortnightly and handed over the responsibility to OMCs in case the government plans to go for daily price revision in future.

He said all the OMCs were ready to take this responsibility as announcing of daily POL prices by OMCs would create a competition among them and consumers would immediately witness the impact of the fluctuation in international oil price.

He said that the OMCs were in the process of equipping themselves with a sophisticated infrastructure network required for daily price announcement. “The Petroleum Ministry is reviewing the OCAC proposal and also the suggestions given by Senate Standing Committee on Petroleum regarding the daily pricing and cut in number of oil depots to eight from 29 all over the country,” he added.

Coming back to the statement, the OCAC secretary general said that the committee had adjusted the petrol and diesel price upward by 42 and 39 times and during the same period the prices of these two products had been revised down by 23 times and unchanged by 28 and 31 times respectively since the committee had been assigned the task of calculating POL prices in July 2001.

The maximum increase was Rs2.66 per litre in diesel on May 16, 2002 and the maximum decrease in diesel was Rs3.25 per litre on April 16, 2003. The OCAC statement says that the local POL price formula is linked with the prices in the international market and since 1999 the price of diesel has increased from $11 to $61 a barrel, an increase of 450 per cent. Since May 2004, the price of diesel has increased by 60 per cent from $37 to $60 a barrel; whereas the price of diesel in Pakistan has increased by only 19 per cent from Rs24.37 to Rs29.05 a litre.

“The differential is costing the government and the oil industry Rs51 billion. The oil industry has borne Rs14 billion on account of price differential claims and is being claimed from the government,” it said.

The press release said that price of diesel and naphtha in global market during March 16-31, 2005 rose by 14 and seven per cent over the previous fortnight to $58 a barrel and $432 a ton. The government during that fortnight decided to pass on the increase in petrol to the consumers while keeping price frozen at the level of the previous fortnight for diesel, kerosene, and light diesel oil. The increase was subsidised by the industry at Rs1.92 per litre for diesel, Rs3.12 per litre for kerosene, and Rs1.62 per litre for LDO. This subsidy by the OMCs during the fortnight cost the industry Rs280 million.

During April 1-15, 2005 the position of prices in the global markets did not ease and price of diesel increased by another six per cent to $61 a barrel and naphtha by 5.2 per cent to $455 a ton. Once again the government decided not to pass on the increase to the consumers and the oil industry subsidized the raise in POL products by Rs4.17 in diesel, Rs5.67 in kerosene and Rs3.35 per litre in LDO further increasing the price differential claim of the oil industry on account of keeping the prices stable by another Rs1 billion for the fortnight.

Diesel price during April 16-30, 2005 further increased by three per cent to $63 a barrel while the prices were kept frozen by the government at March 1 levels and the oil industry continued to once again bear the differential by Rs4.87 for diesel, Rs5.57 for kerosene and Rs7.90 per litre for LDO, raising the oil industries’ claim to the government on account of stabilizing the prices by another Rs2 billion.

During May 1-15, the price of diesel fell to $60 a barrel but is still higher than the level of March 1-15 ($51 a barrel) by 18 per cent when the government started freezing the prices once again. The Oil industry during the current fortnight continues to bear the differential in the price increased by Rs4.25 in diesel, Rs7.17 in kerosene, and Rs4 per litre in LDO. The oil industry’s claim to the government for the current fortnight is approximately Rs1.3 billion.

The total claim for the oil industry since August 2004 when it started to bear the differential on account of the increases in oil prices is nearly Rs14 billion out of which the government had paid back to the oil industry Rs6 billion and still owes Rs8 billion, the statement concluded.