KARACHI: Business leaders on Saturday said the massive hike in prices of petroleum products would further fuel the unprecedented inflation, intensify miseries for the common man and create serious issues for the industry due to the unbearably high cost of doing business.
They criticised the caretaker government that it should have kept the prices of petroleum unchanged due to the falling landing cost of imported crude on account of the persistent rise in the rupee strength against the dollar in the last eight interbank sessions despite rising crude oil prices in the world market.
The government had raised petrol and diesel rates by 8.5pc and 5.6pc, respectively, effective Sept 16.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Sheikh, in a statement, explained that the rupee closed at 296.85 for a dollar in interbank on Friday, reflecting more than Rs10 to a dollar gain which touched Rs307.10 on Sept 5.
He chief recalled that the apex chamber had forewarned the authorities several times over the last few months to address the teething problems in the import of the Russian crude, i.e. handling of oil cargoes; adjustments required vis-à-vis refining processes and commercial transactional procedures to settle oil payments. Nevertheless, the authorities failed to listen to the FPCCI and currently the country would have more Russian crude by now, which is cheaper by a whopping 40pc as compared to international markets today.
While appreciating the status quo in the key policy rate by the State Bank, Mr Sheikh said the trade and industry was looking for a discounted and regionally competitive export finance scheme (EFS), long-term financing facility (LTFF) and temporary economic refinance facility (TERF) rates to cope up with the economic instability, cost of doing business and restoring competitive equilibrium in its exports.
Offering a different view, Pakistan Business Council (PBC) chief executive officer Ehsan Malik said that with an increase in the global cost of fuel and our high degree of reliance on imports, a price revision was inevitable. However, even after the latest increase, the price per litre of petrol at Rs331.38 and of diesel at Rs329.18 in Pakistan is lower than those across the border in India.
With the present pressure on both the current and fiscal accounts, he said “we can’t afford to lower taxes to buffer the impact of rising global cost of fuel. Besides, we have commitments to the IMF to deliver,” Mr Ehsan said.
Karachi Chamber of Commerce and Industry (KCCI) president Mohammad Tariq Yousuf, in a statement, said it has become almost impossible to run the industries at such a high cost. This was the fourth consecutive hike in petroleum prices whereas, during the tenure of the caretaker government alone, the petrol price has been raised by more than Rs58 per litre, which was going to create a lot of problems for the already ailing economy as the production has been curtailed by many industrial units to a great extent due to high cost.
The general public was already overburdened because of the recent increase in electricity tariffs which is aggravated by the extraordinary upsurge in petroleum prices, triggering severe anxiety not only amongst the masses but also the business and industrial community.
Given the economic crisis being faced by the country, the government has to take harsh steps to generate the required revenue for overcoming expenditures and fulfilling international commitments. However, instead of taking these steps back-to-back, the government should devise some kind of an effective strategy to ensure some sigh of relief to the masses and the industry who will not be able to bear the brunt caused by consecutive price hikes.
Tariq Yousuf stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the rising petroleum prices and electricity tariffs would continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the poor poorer due to unbearable inflation.
Published in Dawn, September 17th, 2023