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Furnace oil price hike premature, say traders

RECORDER REPORT

KARACHI: The federal government made a premature increase in furnace oil price of 15 percent taking per metric tonne price upto Rs 9,634.41 from existing Rs. 8377, market sources said on Wednesday.

With the new increase, the actual price of frunace oil has risen to Rs. 8377 from Rs 7285 per metric tonne. The net price of a unit comes to Rs 9,634.41 with the levy of 15 percent GST that is already liable.

The increase, though expected, has been against the government's own self-commitment which it made when it revised upward the POL prices two months back, saying the next revision would be done after three months.

Pakistan State Oil (PSO), being aware of impending increase, resorted to stop its fuel oil supply since Tuesday evening till late Wednesday afternoon.

Shell Pakistan also stopped supplying consignments of furnace oil from Wednesday morning and resumed in the evening, ensuring addtional increase in prices by its customers.

Confusion and anger prevailed in the quarters involved in the furnace oil business due to the oil companies' demand to pay the difference for their consignments which they paid on Tuesday.

"It is sheer injustice that the oil companies should charge us the difference whereas we have sold it at old rate, they said.

According to the Shell's internal notification, the government notified this increase on February 15 with its application from February 16.

The increase in the overall petroleum prices were expected in view of their being indexed with the international oil benchmark which have gone considerably up from December 12, when the government made the last increase. But the Finance Minister had assured that further revision would be made on three-month basis, which falls on March 12.

Fresh measures have been taken for stabilising the federal revenues, which the government earns by raising development surcharge on the petroleum consumption.

PSO would be another beneficiary of the fuel oil price hike. Being the largest seller of fuel oil, PSO earned a high profit for the year ended June 1999 despite its overall sale and market share dropped.

Catalytic inflatory impacts are feared to mount on the economy that is already stagnant for about last four years.