KARACHI, Jan 20: The Pakistan State Oil has not passed on a relief of Rs796.4 million to diesel consumers over the past five and a half months, Dawn learnt here on Friday.

Well-placed sources said that during the past five and a half months the PSO had imported 1,896,294,922 litres of high-speed diesel (HSD) at a cost of Rs20,217,386,326. The average price had come to Rs10.66 per litre.

They added that on the other hand the remaining two oil marketing companies — Shell and Caltex — had imported 502,764,356 litres of HSD at a cost of Rs5,572,659,753. Their average price had come to Rs11.08 per litre.

“On every litre of diesel sold the PSO earned Rs0.42 more than the other oil marketing companies. The PSO could have passed on a benefit of Rs796.4 million to consumers.”

The PSO, with as many as 4,000 retail outlets in the country, commands 75 per cent share of the diesel market. The use of diesel far exceeds the use of other fuels, such as petrol, compressed natural gas and liquefied petroleum gas.

PSO sources admitted that they could have sold diesel at lowered rates. “The reason why we sell HSD at rates equal to those of other oil marketing companies is that the government has enforced a pricing mechanism in the country under which all oil marketing companies sell their products at an even price.”

In July last year, the government deregulated the pricing system of petroleum products, allowing the three oil marketing companies to adjust prices on a fortnightly basis. This was hailed as a “big step” towards deregulation of the petroleum sector in an announcement made by the petroleum secretary on July 13, 2001.

The deregulated pricing system has three aspects: authorization of the oil marketing companies to fix future prices, change in internal freight equalization margin to link local refinery prices to those fixed by the oil marketing companies, and replacement of petroleum development surcharge with a petroleum levy on the product basis.

Under the new pricing mechanism the new prices are applicable to the 29 depots in various parts of the country and consumers are charged after adding transportation cost (from the depot to the retail outlet) to the prices.

The PSO sources told Dawn that price at which HSD was sold these days — Rs15.11 per litre — came after adding excise duty, petroleum development levy, inland freight, dealer margin, distribution margin and sales tax.

They noted that taking advantage of their huge infrastructure and enormous market share they could have sold all petroleum products at lower rates. “The reason why the PSO sells petroleum products at a rate at a par with those of other oil marketing companies is to protect them.”

Analysts, however, question this line of argument. They maintain that the deregulation of a sector should result in its complete dependence on market forces. “Protectionism is an anathema to the exponents of deregulated economy.”