ISLAMABAD, Jan 25: The bureaucracy in the Central Board of Revenue and the association representing the edible oil industry are locked in a blame-game as consumers suffer due to persistent rise in prices of ghee and oil for the last few months.
The oil industry association has again informed the government that there may be a possible increase in the price of imported RBD palm olein for an indefinite period which would further push up prices at the retail stage.
The average price of vegetable ghee (2.5 kg tin) reached Rs214 in January 2007 from Rs204 in December 2005, indicating a Rs4 per kg increase during the period.
The price of vegetable ghee (loose) also witnessed an increase of 19.26pc to Rs71 per kg in January 2007 from Rs58.75 in December 2005.
Similarly, the price of cooking oil (2.5 litre tin) witnessed an upsurge of 4.88pc to Rs215 in January as against Rs205 in December 2005.
A senior customs official said edible oil is one of the leading sources of customs duties.
Within the palm oils, there are three major contributors of custom duty, namely, palm olien, crude oils and RBD palm oil. The palm olien is the top contributor with 70 per cent of overall collection of customs duty from edible oils group.
According to the official, it was not possible to further slash tariff on import of edible oil, which would have a serious impact on revenue collection.
On the other hand, the Indian government has reduced customs duty on imported RBD palm olein and other palm oils from 80 per cent to 67.5 per cent to pass on relief to consumers.
Secretary Pakistan Vanaspati Manufacturers’ Association (PVMA) Dr Ghulam M. Samdani said that for reducing the price of ghee and oil in the market, the government would have to reduce current taxes and duties of more than Rs19 per kg to a reasonable level.
“The government has to take the first step and reduce its own duties and taxes to provide relief to consumers and eventually generate more revenues, including foreign exchange through exports for itself,” he added.
He said that the association had once again apprised the CBR and the ministry of industry and production of the situation created by rising price of vegetable ghee and cooking oil, resulting from increasing trend in the C&F price of RBD palm olein and ipso facto vegetable ghee/cooking oil.
It was stressed during last meetings with the government that, as the PVMA member units have virtually no margin to reduce the manufacturing cost of vegetable ghee/cooking oil, the government must take the first step and reduce its own duties and taxes and the proportionate relief in price would be passed onto the consumers, he said.
He said the price of a 16kg tin of vegetable ghee has increased from Rs947 on Jan 3, 2006 to Rs1,180 on Jan 3. Resultantly and naturally, the domestic demand of vegetable ghee declined to 50 per cent during this period and likewise the export of vegetable ghee to Afghanistan came down to 30 per cent from 35 per cent in December, 2006.
The secretary said Afghanistan, has been a traditional export market for Pakistan and the reduced share of exports to this country has been captured by Malaysia and the UAE.
It is apprehended that if the present situation continues, not only the domestic vegetable ghee and cooking oil industry would face a total disaster, the domestic market vacuum is also likely to be captured by Malaysia and the UAE, he added.