Pakistan: Economic Cordination Committee Debates Fuel Shortages
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Monday, 29 December 2008 |
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The Economic Coordination Committee (ECC) of the cabinet will discuss
the issue of the artificial countrywide shortages of petrol and the
demand of the oil marketing companies (OMCs) for an increase in profit
margin.
Majority of the petrol stations countrywide are faced with supply
shortages, though at different levels. The shortage is believed to have
been caused by oil marketing companies which want the government to
increase their per litre profit margin on petrol from the existing
Rs0.66 to around Rs1.50, equal to that of the profit margin on diesel.
The shortages are more evident in Punjab, where petrol supplies have
declined by more than 40 per cent during first half of December. Sindh,
Balochistan, NWFP and upper parts of the country are now also feeling
the widening gap between the supply and demand of petrol.
The marketing companies have fuelled up the demand for increase in
profit margin since December 15, when the government refused to slash
petroleum products prices for domestic consumers despite constant fall
in international crude oil prices and rather increased the ratio of
tax, the Petroleum Development Levy (PDL), to earn more.
The government now charges Rs29.49 PDL on a litre of petrol sold at
retail outlets. The PDL ratio on a litre of petrol is, however, Rs30.24
if sold directly to consumers by companies. The oil marketing companies
have demanded the government to increase their profit margin by
reducing the ratio of PDL so that consumers are also not affected.
Sources told Dawn that a summary by the ministry of petroleum had
already been forwarded to the ECC and that it was more likely that the
demand of the marketing companies would be accepted to normalise petrol
supplies. They said the government had no other option but to
increase the profit margin because, if they further tightened the screw
on petrol supplies domestic refineries will suffer further.
Oil refineries are already operating at 40 to 50 per cent of their
capacity due to declining petrol consumption, which is the most
expensive fuel compared to diesel and compressed natural gas. The
government, under a policy, is already trying to bring the petrol
prices below that of diesel to encourage its consumption and enable
refineries to operate at full capacity.
PetrolWorld 241208
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