Instead of bringing in transparency in the system for a fair cost recovery, the ministry of petroleum and natural resources is in a hurry to deregulate oil pricing, though it collects more than 20 per cent of its total tax revenue from oil business.
Over the last six months or so, the ministry has consistently been changing goal posts, presenting one summary after the other and then withdrawing it, in its attempt to empower the powerful oil interests to decide about the interests of the 180 million consumers and to allow them to charge different prices at different locations for the same product.
This apparently is against the spirit of federalism based on mutual concerns and interests of the people of the four federating units and special areas like Azad Kashmir, Federally Administered Tribal Areas and Gilgit-Baltistan.
The objective of a federation is to create stability, equality and uniformity of rights and obligations among its citizens based on common interests, and bring the disparate territories closer, on the principle of fair play and equality. This requires the will to solve diverse problems instead of exasperating them.
Despite abolition of concurrent legislative list to transfer such responsibilities including health, education, labour and other social sectors to the provinces, the law makers of current parliament did not touch the federal legislative list or article 70 (4) of the constitution.
Under the federal legislative list, major subjects like railways, electricity, mineral oil and natural gas, ports, regulatory authorities, public debt, international trade and defence have been kept in the federal domain to ensure uniform policy in these sectors for the entire country. The federal government has the powers to impose, remove, reduce or increase taxes on these and many other similar matters.
Because of such a strong constitutional and political protection, successive governments have resisted demands from the international lenders for decades to allow differential electricity tariffs for all provinces, regions and companies to recover actual cost recoveries. An initial attempt a couple of years ago to have separate power tariffs for Karachi and rest of the country before and after the privatisation of Karachi Electric Supply Corporation was strongly opposed by the parliamentarians from the southern port city and had to be shelved. It, however, is a separate case that the federal government had to inject more than Rs50 billion in the privatised KESC to ensure that power rates in Karachi were not higher than rest of the country.
But for short-term political gains, the petroleum ministry is pushing forward a lopsided deregulation of oil prices to enable the oil refineries and marketing companies to fix the prices of their products with complete freedom without ensuring a system to protect the interests of the common consumer. It thrives on the simpler logic of reducing POL prices in big cities without studying the impact on far-flung areas of Balochistan, interior regions of Sindh and Punjab and hilly areas of Khyber Pakhtunkhwa, FATA, Gilgit-Baltistan and Azad Kashmir.
If the petroleum ministry's proposal for different oil prices for different cities and regions was accepted on the basis of transportation cost or proximity with the ports or oil fields, the people in the close vicinity of big dams could justify their right for cheaper electricity rates than their counterparts in far-flung areas. A case in point is KP's demand for lower rates because of Tarbela dam and Azad Kashmir for Mangla dam because of cheaper power generation cost of the two major reservoirs.
The Punjab government has been voicing its concern over higher load shedding in its cities despite lower electricity losses in power companies operating in its jurisdiction. The electricity tariff for distribution companies in Punjab duly determined by the National Electric Power Regulatory Authority (Nepra) is quite lower than those in Balochistan, Sindh and KP.
The average tariff of four out of five distribution companies operating in Punjab, range between Rs5-6 per unit while rates for similar companies based in Quetta, Karachi, Hyderabad and Peshawar hover around Rs8-12 per unit. It is, however, the concept of equality and uniformity that electricity consumers across the country are charged the same rate through inter-company cross subsidy without applicability of the principle of transportation cost and proximity with power houses.
Likewise, the production cost of natural gas in Balochistan is less than Rs70 per MMBTU compared with over Rs300 per MMBTU in Sindh or other new discoveries in other provinces. As a result, the price differential between Sui Southern Gas Company that feeds Sindh and Balochistan and Sui Northern Gas Pipelines Limited supplying gas to Punjab and KP currently stands at around Rs60 per unit. But the government is equalising their sale prices to ensure uniform rates for consumers across the country.
Official calculations suggest that after complete abolition of the freight margin, the price of HSD in Karachi will decrease by Rs1.84 per litre and of petrol by Rs3.22. In Chitral, the price of HSD will increase by Rs2.88 and that of petrol by Rs1.5. Consumers in all big cities will benefit because the prices at nine out of the 12 depots will reduce by 17 paisa to Rs1.84 for HSD and 72 paisa to Rs3.22 for petrol.
The price of HSD at Juglot, serving Gilgit-Baltistan will increase by Rs2.14 and of petrol by 76 paisa. The diesel price in Quetta will increase by 21 paisa, but petrol price will decrease by 72 paisa. The diesel prices will decrease by Rs1.14 per litre in Shikarpur, 73 paisa in Multan (Mehmoodkot), 17 paisa in Vehari, 37 paisa in Faisalabad, 38 paisa in Lahore (Machike), 66 paisa in Jhelum, Rs1.14 in Rawalpindi and Islamabad and 62 paisa in Peshawar (Tarujabba).
This, however, has the potential of opening a new Pandora's box for further inter-provincial and inter-regional disparities, leading to increasing poverty in remote areas and resultant sense of deprivation.
Electricity, natural gas and oil are all governed with a principle of uniformity by the federation under the federal legislative list. A new approach to any of the subjects will have political effects across the country. The nation has already suffered a lot on these counts in the past and can hardly afford more controversies for short-term political gains.
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