Price freeze fattens oil firms at consumers’ cost
ISLAMABAD: The chairman Oil and Gas Regulatory Authority (Ogra) told a parliamentary committee on Wednesday that prices of petroleum products could drop by up to Rs3.58 per litre because of a decline in international market but the current freeze on oil prices was adding to the profit of oil marketing companies at the cost of common consumers.
Replying to questions by members of the Senate standing committee on cabinet, Ogra chairman Saeed Ahmed Khan said that on the basis of international prices on Nov 12, price of high-speed diesel was estimated to come down by Rs3.58 per litre and of kerosene oil by Rs2 per litre.
The price of petrol is estimated to have gone up by Rs2.50 per litre.
The meeting was presided over by Senator Kalsoom Parveen and attended by Saeeda Iqbal, Abdul Haseeb Khan, Kamil Ali Agha and Najma Hameed. Almost all senators criticised Ogra for not functioning independently and transparently as required under the law, but was following instructions of the ministries of finance and petroleum.
Senator Abdul Haseeb Khan criticised Ogra and said its role had shaken foundations of national economy because unabated increase in oil prices had caused steep rise in prices of all products and commodities and undermined industrial growth. He said Ogra was not taking its regulatory decisions independently and it was neither autonomous nor independent.
On an explanation by the Ogra chief that the government could issue policy guidelines to the organisation, Senator Haseeb pointed out that Ogra had been run under an ordinance for years instead of an act of parliament. The chairman said that the Ogra ordinance was among 40 ordinances of the previous government which had been validated by the current parliament and hence it had become an act although it was still being called Ogra ordinance.
The members questioned the appointment of Ogra chairman by the government and suggested that he should be elected by members of Ogra. Senator Kalsoom Parveen said it was ironic that the former chairman of Ogra Tauqir Sadiq was dismissed on allegations of corruption, which indicated that the selection process was not transparent despite the fact that Ogra decisions had direct and indirect impact on 180 million people of the country.
Senator Kamil Ali Agha said petroleum companies were top profit-earners and their profits were one of the main factors adversely affecting the industrial sector and the common people. He said the standing committee was not against their profits but these should be prudent and reasonable. He said the committee was dissatisfied with the gas pricing mechanism and pointed out that a single intervention by the Supreme Court had led to a reduction in CNG price by over 35 per cent which clearly showed how consumers were being fleeced.
Senator Haseeb Khan said it was tragic the prime minister’s Adviser on Petroleum Dr Asim Hussain claimed in parliament that he had nothing to do with Ogra and that oil prices were fixed by Ogra, but Ogra chief was confirming that the decision on oil prices was taken by the ministries of finance and petroleum even though the pricing summary was prepared by Ogra.
He said he would move a motion in Senate against Dr Asim Hussain for misleading the house.
Ogra chairman Saeed Khan said while presenting pricing comparison to the government that Ogra also recommended for scaling down petroleum levy to protect consumers against price hike but these recommendations were turned down by the two ministries.
He said that as the chief of Ogra he could not reduce or increase prices because the government had been deregulating oil prices since 2011 in the light of Bhagwandas Commission’s recommendations, adding that Ogra only monitored the prices determined by oil marketing companies instead of notifying such prices.
He said the current prices of petroleum products were fixed when the international diesel price stood at $129 per barrel, kerosene at $129 per barrel and petrol at $112 per barrel on October 22. He did not give details of all products but said the price of diesel in the international market had come down to $119 per barrel on Nov 12, which should translate into a price reduction of Rs3.58 per litre in the domestic market. Likewise the price of petrol was estimated to increase by Rs2.50 per cent while that of kerosene was to decline by Rs2 per litre.
He said Ogra was against fortnightly and weekly reviews of oil prices but its opinion was overruled by the federal cabinet. Additional Secretary Shahidullah Baig told the committee a meeting of the Economic Coordination Committee of the cabinet was expected to be held on Nov 20 to revert to monthly pricing with effect from Dec 1.