Tawanai

Via Pakistan Times

Amid typical pretext that over the past few months Pakistan did not pass on the oil price-hike to the populous – despite burden of almost over Rs.125 billion – a drastic increase in the price-index of petroleum products has eventually hit the masses, the ultimate impact of anguish and agony shall fall on those who fall in the category of ‘have-nots’.

As a matter of fact, the increase of 5 to 9 per cent in POL prices has come as a big shock, which will have hefty negative impact on the inflation stricken masses and the fragile economy.

As we understand, industrialists, exporters and traders are of the opinion that there was no valid justification to increase the petroleum prices as international prices are still below $ 80 per barrel and the decision would be detrimental to local industry, especially to the exporters.

Many prominent economists say that this action is expected to increase inflation. The unprecedented increase in the prices of petroleum products has already put the industry at a disadvantage where consumers matter.

It would create a bigger financial crunch, increase economic difficulties, be it the business community, agriculture sector or the general public. Public transport vehicle owners and business community, besides the people from various walks of life, have already started protesting against the hike.

Prices of consumer items, electricity tariff and transport fares would go up substantially due to this increase. Industrialists are already facing plentiful problems because of electricity and gas shortage coupled with high mark-up and it would be difficult for the industry to absorb the new shock.

The increase in diesel will also bring financial miseries to the agricultural community. The country is facing irrigation water shortage and it is supplemented by tube-wells, which are mainly operated through diesel.

Going by analytical realism, it seems that there is no realization on the part of the policy makers that higher oil prices get translated into higher commodity prices. Surge in petroleum products prices will not only increase the Sensitive Price Index (SPI), it would also bring more people below the poverty line and directly impact the pace of industrial and commercial activities.

We honest think that instead of generating revenue through the easy source of increasing POL prices, the government should devise a strategy to bring down the non-development expenditure, avoid wasteful expenses, widen the tax net and plug the leakages.

True that once upon a time, the national exchequer had to bear – what is termed as subsidy – through support from borrowing and reducing the development expenses – yet the newest decision of increase in oil and its related products is bound to add still more fiscal problems and miseries for the populous –specifically the poor.

Paradoxically, instead of healing the wounds, inflicted on hearts and soul of the people, the government has once again raised the price of POL products by Rs 6.10 – taking petrol price to Rs71.21 from Rs65.11 per litre.

Likewise, the price of High Speed Diesel has been raised to Rs71.89, Light Diesel oil to Rs61.07, HOBC to Rs86.84 and Kerosene oil to Rs64.60 per litre.

This alarming rise would surely have crippling impact on the national economy, which is already in depression. The increase would lead to a snowballing effect in prices of multiple items, pushing up the overall inflation and making it all the more harder for the common man to meet both ends.

It is a recognized fact that any addition in fuel prices sets inflationary spiral into motion, which is a perilous phenomenon. High-energy prices have already sapped consumer and business spending and depressed economic growth. The latest hike would cause more inflationary pressure, increase transportation cost, create more difficulties for common man and destroy the entire industry.

There is no denying the fact that the price of oil in the international market did go up by hovering around $ 80 a barrel yet the increase of above Rs6 per litre has no justification as the government made a similar increase in POL prices on 1st September, 2009 when the prices were about $ 70 a barrel.

As international economy is recovering from recession, demand and price of oil would go up and hence additional burden on industry, consumers as well as on balance of payment as our products would be less competitive in the international market because of fluctuating energy prices.

Hence the future of energy availability at affordable cost has become an issue which needs to be deliberated and addressed predominantly by the developing countries including Pakistan – if at all they wish to maintain their economic growth with zeal and zest to improve the standard of living of their people.

The main reason was that the previous government was not willing to earn a bad name – as the inflation was at an all time high – resultantly the common man was suffering due to higher prices of food items.

Later when the elections in Pakistan were over and the economy – obviously was no more able to absorb the crunch of subsidy – the government took several difficult and taxing decisions.

Amid the then scenario – the present set-up raised the prices of oil and electricity. Eventually, another cycle of inflation hit the masses and the industry – as transportation and production costs would go up.

By all means – the foremost question is as to what should be done to overcome the alarming crisis? And pragmatically the only answer – which surfaces is – the optimal exploration of indigenous oil and gas resources on war footing with
initiation of instant exploitation of alternative energy resources.

Of-course, endeavors like exploration is an expensive high risk venture and that too – despite advent of exceptionally advanced and sophisticated equipment.

To keep the economy afloat and inflation under control, concerted efforts need to be made to reduce dependence on imported oil by developing domestic sources of energy supply. These include not only hydro and coal but also wind and solar.

Pakistan could take benefit from the experiments of other countries to develop renewable sources of energy and efficient use of oil.

We would therefore suggest that Pakistan should get involved the private sector interested in investing in these programmes by offering tax relief and redouble oil and gas exploration efforts to meet its growing energy needs.

Thus, it would be a most appropriate and tangible step – if the local and foreign oil exploration companies are given maximum incentives with tax holiday atop for a realistic period pf time along with safe, sound and secure environment for exploration in all vicinities of the country.

At the same time, we ought to gear up the exploitation and use of coal reserves along with solar and wind energy to reduce dependence on imported oil and instead we should meet our energy needs indigenously.

We think – this would be a most befitting measure to save the people from still more financial burdens as well as to make Pakistan self-reliant in all arenas – explicitly in this significant field – the Oil – with sincere determination to attain more zeniths of affluence – based on peace, progress and prosperity – for all times to come.

And, finally we would suggest to the government to withdraw the new increase in the prices of petrol and petroleum products – at-once. We say so because such a hefty increase is not less than yet another toxic shot to the poor masses – who in no way are able to confront any more brunt – in any mode or manner.

Energy, Oil