FPCCI laments Petroleum Price Spike

President of the Federation of Pakistan Chamber of Commerce & Industry (FPCCI) has shown serious concern on exorbitant increase of Rs. 6 per litre in the prices of petrol and diesel with effect from 1st April, 2019 and said, “ It will have a multiplier effect on almost all the business activities including cost of transportation – within and inter-city – of raw materials and consumer goods thus further escalating the cost of production of industrial goods and spurring inflationary trend which at present is already 8.2%”.

The FPCCI Chief elaborated that the price of all the food (fruits and vegetables) and kitchen items ; construction material ; fertilizers ; imported goods etc., would be dearer as these goods are supplied to the different cities of the country through diesel based vehicles.

The FPCCI Chief recalled that the price of crude oil in international market on August 2018, when the PTI government assumed the charge, was US $ 75 / barrel which upto March 28, 2019 was further declined to US $ 66.67 / barrel viz 7% - 8%. “However, instead of passing benefits to the masses, government had not responded to it accordingly and showed reluctance to provide relief to the consumers proportionately”, he added. He argued that the actual price of petrol is Rs. 58.94 / litre whereas it is supplied to the consumers @ Rs. 98.89 / litre out of which about Rs. 40 / litre is earned by the government, dealers and distributors.   

The FPCCI President argued, “About 90% of total consumption of POL products are jointly consumed by the transport sector and power sector, wherein, almost 65% electricity is generated by the thermal while fuel (furnace oil and diesel) consumption for thermal power generation is 52%”.

He therefore, underscored the need to translate these cheaper prices in electricity tariff which would have a positive multiplier effect on cost of operation / production of industrial activities like cement, textile, paint chemical sectors etc. and ultimately contribute in promotion of exports and reduction in inflation. This will also help in shifting the burden from CNG consumption in transport to petrol and making it available to the industrial sector particularly in Punjab which is suffering from acute shortage of gas in winter season.