20000323

Traders fear

exports dwindling

following POL

price hike

NAYYAR ZUBERI

KARACHI: Business community here has criticised the increase in petroleum products prices by five percent and said that the government policies drove away Pakistan from the export market.

They said that Pakistan was already facing number of problems in getting export orders and foreign buyers were demanding reduction of Pak products prices whereas the government measures are compelling us to increase prices due to high cost of production.

They feared that the prices of almost all the local products would register an increase of about five to eight percent as a result of multiple effects of five percent increase in POL prices on production cost.

One of the businessmen suggested that Pakistan should encourage use of CNG in automobile by giving its users some concessions in motor vehicle tax and make it compulsory for petrol pumps to have a CNG station also. This measure will reduce oil consumption to a considerable extent and result in saving of foreign exchange.

He said the total consumption of oil in transport sector was around 7,364,767 tonnes per annum or 44.30 percent of total consumption of oil in the country. Total consumption of oil is around 16.62 million tonnes.

He also suggested that the government should plan converting all the oil-fired power stations into natural gas or on locally produced coal as this sector consumes almost 36.42 percent of total import of oil. This measure would save substantial amount of foreign exchange spent on import.

Site Association of Industry (SAI) Chairman Abdullah Rafi said that frequent increase in POL prices had already made the life more miserable for the common man and now this increase was totally unjustified and not acceptable to the general public as well as industrialists and business community.

He said the government had increased the prices of POL products in December 1999 on the pretext of increase in the international market.

He said that our exports had already declined due to un-competitiveness, high input cost, multiple taxes, higher bank rates, and GST implications, etc. Loan defaults and sicknesses of industrial units were also adding to high input costs, short-term measures like price increase in oil, etc.

Rafi did not agree with the government version and said when oil prices in international markets were low, the benefit was not passed on to the consumers.

He said that figures showed that after May 1999 the prices of motor gasoline had increased from Rs 22.19 to Rs 24.40 per litre and now had further increased to Rs 27 per litre. It meant the government has increased the motor gasoline price by Rs 4.81 per litre, which is 10.66 percent. HOBC by Rs 3.50 which was 12.28 percent, super by Rs 2.96 which was 11.37 percent, MTBE by Rs 3.72 which was 13.86 percent, SKO by Rs 0.84 which was 7.14 percent, HSD by Rs 0.84 which was 7.88 percent, LDO by Rs 0.85 percent which was 10 percent, JP-4 by Rs 1.15 which was 10 percent and FO by Rs 1,214.50 which was 20.01 percent.

Rafi said that domestic consumption increased from 9.96 million tonnes in 1990-91 to 16.62 million tonnes in 1997-98. Power sector consumption is 36.42 percent of the total consumption while transport sector consumes 44.30 percent in 1997-98.

The Site chief requested the government not to succumb to the pressure of the donor agencies and look for other areas to generate revenue without putting extra burden on the business community and the common man.

He suggested that instead of increasing the cost of essential inputs required by the industry the government should concentrate on other areas, such as value addition in agro based industry, fish, marbles, software and provide basic infrastructure to existing industrial areas.

Pakistan Cloth Merchants Association (PCMA) Central Chairman A Sattar Chinoy has also expressed serious concern over the POL price hike and demanded immediate withdrawal.

He criticised the frequent increase and stated that not only the production costs rises, the country's exports are also rendered un-competitive in the international market.

Sattar Chinoy stated that beside affecting the economy, the increase will also hurt the consumers due to its multiple inflationary effects.