THE federal government recently increased fuel prices by a record Rs25 per litre to touch Rs100 per litre. This was basically because of pressure from oil marketing companies for continuously booking impairments on their inventories on declining prices.

Fuel consumption in June stood at approximately 725,000 tonnes. Initially, instead of reducing prices to Rs80, why doesn’t the government make a fund which will absorb both upward and downward revision of oil prices?

When oil prices declined significantly, the government should maintain prices and put the amount in such a fund. On an increase in fuel prices, the same fund should be used to compensate the additional burden. Hence, fuel prices at Rs100 per litre can be maintained at long term.

Now the government is again planning to decrease petrol prices by eight to 12 rupees per litre. It has been observed the decline in fuel prices by A few rupees doesn’t benefit the people as a whole. Instead, this benefits certain targeted sectors like transporters and IPPs.

An average person paying for fuel at Rs90 per litre will be happy to pay Rs100 per litre if he knows that later when prices may increase, he will be paying again Rs100 per litre when it actually cost Rs110 per litre.

Khawar Abbas
Karachi

Published in Dawn, July 10th, 2020