ICCI PRESIDENT STRESSES UPON THE GOVERNMENT TO PASS ON THE BENEFITS OF REDUCTION IN OIL PRICES TO THE CONSUMERS

Oil price in international market has come down from $ 147 per barrel and is hovering around $123 per barrel but consumers have not been provided any relief of this reduction in oil price while they deserve this benefit, stated Muhammad Ijaz Abbasi, President, Islamabad Chamber of Commerce and Industry in a statement. He also showed great concern on a news item according to which Economic Advisory Committee has recommended further increase in gas prices for reducing the size of the subsidy the government is bearing on gas prices.

ICCI President said unprecedented price hike in petroleum products coupled with frequent upward revision in electricity, gas tariff and enhanced transportation charges continue to push prices of majority of the essential items and making life more difficult for general public. He said to ease some pressure on people; government should desist from enhancing gas prices and should immediately pass on the benefits of the reduction in oil prices to the consumers by oil pricing rationalization instead of just securing the national exchequer from the burden of subsidy.

Muhammad Ijaz Abbasi said government paid Rs 165 billion to OMCs as price differential claims due to rising oil pricing in the international market while earned Rs 127 billion from the consumers of POL in term of duties and taxes during the last financial year 2007-08, thus government gave net subsidy of Rs.38 billion only and rejected government claim that the subsidy on petroleum products was the main reason of the high budget deficit during the last financial year. He emphasized that to bring down inflation in the country and to ease the pressure of high prices on people, government should bring down GST on POL products from 16 percent to 10 percent so that people could take some sigh of relief.

Muhammad Ijaz Abbasi appreciated government decision to cap the base for calculation of oil marketing companies (OMCs) and dealers’ margin at US$ 100 per barrel and reducing the deemed duty from 10 percent to 7.5 percent and called for its gradual elimination. He said this duty should have been revised in 2003 as the facility was given to OMCs as an incentive in 2002 for one year only, but due to strong lobbying from the refineries, government reduced the deemed duty in 2008 that was to be revised after one year and thus oil refineries earned Rs 12 billion during the last financial year 2007-08. He called for further reduction in deemed duty to reduce oil prices in the country and bring down inflationary pressures on the economy.

ICCI President also lauded government decision to assign the calculation of Freight Inland Equalisation Margin (FIEM) to Oil and Gas Regulatory Authority instead of the existing practice by Oil Companies Advisory Committee and hoped that this decision would lead to reduction in the prices of POL products.

In the end, Muhammad Ijaz Abbasi said business and industry cannot grow and flourish in an environment of squeezed purchasing power and stressed upon the government to pass on the benefits of reduction in OMCs’ and dealers’ margins as well as in oil prices to the consumers enabling them to improve their purchasing power which will lead to promotion and growth of business and investment activities in the country.