South Asian Business news and information

Pakistan government is now planning to change the pricing policies of the oil products. The government is planning to use inflation and fluctuation rate based on Consumer Price Index (CPI) to determine the price margins for the oil marketing companies that import and sale oil in the domestic market. The current pricing formula “of 3.5% on ex-refinery price” allows the oil importing companies gain windfall profits.”

A delegation from the Oil Company Advisory Committee (OCAC) will hold a meeting with the Petroleum Ministry officials on June 3, 2008 and propose the government to reduce the duty on diesel and sales tax rate on other oil products. However, the Federal Board of Revenue (FBR) of Pakistan will not accept the proposals as it has planned to collect Rs 1,250 billion through tax. Out of this 1,250 billion rupees, FBR is predicting a 20% contribution from the oil sector.

The News reports:

The OCAC will meet with Petroleum Ministry’s high-ups tomorrow (Thursday) in Islamabad for discussing the pricing formula in detail and recommend viable options to find solutions. “It is expected that the new pricing formula will be in place within one month,” said the sources and added that the OCAC is sternly opposing any move to bring changes in the existing formula on the pretext that the cost of doing business is on the increasing side and it will not be economically viable to reduce their margins.

Along with the new pricing policy, the government is also planning to reduce the number of oil depots around the country. Currently, there are 29 oil depots in Pakistan. OCAC is saying that if the government starts a new policy scrapping the existing one without taking OCAC into confidence, then the supply of oil production will be in jeopardy. The OCAC is also saying that government should cut down the taxes on oil products to give the consumers relief from high oil prices. 

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The News