Petrol up?

The anticipated price hike in petroleum prices has been delayed, but – alarmingly for the Pakistani people – not rejected. The news that Ogra had asked for a 14 percent increase in the price of petroleum products sent shivers down the spines of the public particularly with Ramazan about to start. Instead of the much anticipated Ramazan support schemes to regulate prices, the fear is that the PTI government will transfer another petrol price hike on the public. However, in a cabinet meeting on Tuesday, the government decided to refer the matter to the Economic Coordination Committee. According to reports, PM Imran Khan had disagreed with the Ogra proposal, and would rather that the burden of an increase in international prices of oil not be transferred to the public. Officials have explained that the international price of oil has gone up, which means that the government has two options: beat the losses or transfer the price increase to the public. What decision the government will take is something we will no doubt see in the next few days, since the ECC meeting is set to take up the matter today.The options in front of the ECC will be limited. The trouble is that the PTI government has done such a poor job of regulating the price of essential goods in its short tenure that even a necessary increase in petroleum prices will be seen as part of how it is transferring all the burden on the public. Moreover, one must genuinely question how, if the Ogra’s recommendations are accepted, petrol prices in Pakistan will be higher than what they were at the end of 2013-14 when global crude oil prices hit over $100 per barrel? The Iran sanctions and tense situation in Venezuela mean that current oil markets are volatile; however, the crude oil price continues to hover around $65 per barrel. One of the crucial issues in justifying the oil price increases remains the lack of transparency in terms of Ogra’s decision-making process. Press releases from Ogra fail to detail its rationale. While details would not be sufficient to justify the 14 percent price hike it has proposed, it would at least allow some understanding of how it makes its calculations. Instead, we should now expect the usual practice of the government slashing Ogra’s price hike recommendation and making a big hoopla over how it has not transferred the full hike on to the public. Petroleum prices should not merely be an economic decision, the economic part of the decision should also be transparently shared.

from The News International - Editorial http://bit.ly/2ZN7KcO