KARACHI, Aug 31: The Oil Companies Advisory Committee (OCAC), after a gap of two months, has finally decided to squeeze consumers by increasing petrol price by Rs3.67, from Rs48.94 per litre to Rs52.61.

It also nudged up diesel rate by Rs2.85 per litre, from Rs31.74 to Rs34.59.

When Shaukat Aziz had been sworn in as the country’s new premier in August 2004, petrol was selling at Rs36.92 per litre, while diesel was available at Rs24.37 per litre. This means that petrol has become costlier by Rs15.69 and diesel by Rs10.22 per litre since then.

In January 2005, petrol and diesel were being sold at Rs40.39 and Rs26.21 per litre.

The OCAC, a strong cartel of oil marketing companies (OMCs), has no role of its own despite deregulation of the petroleum sector. The government still dictates its terms to the OMCs, something evident from the price freeze imposed on various occasions.

For instance, the committee had kept the price of all POL products unchanged over the last four fortnights (two months) because the local body elections were due on August 18 and 25.

The increase in diesel price will encourage transporters to put up a case before provincial transport ministry for increasing transport fares.

The price of vegetables and fruits is expected to rise in coming weeks as transporters will demand fare increase from the wholesalers and vendors for transportation of greens from upcountry and also from New Subzi Mandi at Super Highway to various city destinations on account of diesel price hike.

The cost of production of various items is also set to rise further and ultimately the consumers will have to swallow the bitter pill of paying higher prices of essential items.

The month of September may witness increase in inflation, measured by the Consumer Price Index (CPI), which had already been under pressure for the last one year. Inflation in July-June 2004-2005 remained at 9.28 per cent while in July 2005 it was recorded at 8.99 per cent.

The price hike has been made at a time when Ramazan is only one month away (falling in October). Retailers, wholesalers and traders would now use the price hike of petroleum products as a tool for increasing the retail and wholesale prices on account of rising transportation charges for goods.

Ironically, consumer protection bodies have been watching the situation from the sidelines.

The OCAC said in a handout that the price of HOBC had been enhanced to Rs58.46 from Rs54.33; kerosene to Rs31 from Rs29.53 and light diesel oil to Rs29.22 from Rs27.84 per litre.

The committee attributed the domestic price hike to rising price trend in the global crude oil and finished products prices.

It said that oil prices in international market had reached an all-time high with diesel increasing to $68 a barrel. Naphtha increased by over $32 per ton to $510 per ton and kerosene rose to $74 per barrel. On Wednesday, the price for diesel reached historic levels of $77 per barrel in the Arab Gulf market and kerosene touched $80 a barrel.

It may be noted that the OCAC did not mention the price of Light Arab Crude on which the domestic price in Pakistan was determined.

The OCAC said the government had already absorbed an impact of Rs65 billion since May 2004 by removing altogether the petroleum development levy (PDL) and paying out price differential claims to the oil industry on account of stabilising the prices throughout the year.

The OMCs at present continue to subsidise the price of diesel by Rs3.31, kerosene by Rs6.95 and light diesel oil by Rs4.52 per litre. At present, the balance claim for the oil industry on account of price differential claims stands at Rs6.5 billion after a payment of Rs3 billion which is due by the end of this week.

Product Existing Revised Increase

Rs/Litre Rs/Litre Rs/Litre

Motor Spirit…………48.94……….52.61……….3.67

HOBC……………….54.33……….58.46……….4.07

Kerosene Oil………...29.53……….31.00……….1.47

Light Diesel Oil……...27.84……….29.22……….1.38