KARACHI, March 1: The fresh hike in petroleum products prices jolted the trade and industry invoking strong criticism from business leaders who demand that the increase be withdrawn immediately.

While the general public was in a shock and transporters threatened to strike, trade and industry representatives said the sudden jump in oil prices would erode viability of the economy.

On average, the government increased oil prices by 9.9 per cent.

They said not only the flood of high inflation would hit the entire segments of the economy, unemployment would rise to record peak in just few months.

However, analysts watching the global oil price trend said the oil increase in Pakistan was must to avoid further deterioration of fiscal management already facing severe shortage of revenue.

They said the political turmoil in the Middle East has endangered smooth supply of oil to the global markets, and pushed the price as high as $120 per barrel from $80-85 earlier.

They said Pakistan depends 90 per cent on imported oil which means the country needs to increase oil prices to meet the cost.

However, traders and industrialists were following the line of some political parties demanding immediate withdrawal of increase in oil prices. Industry sources said they were in touch with political parties for action against the oil price increase.

They said the government had still been earning from petroleum development levy (PDL) on oil and gas and in the first six months of the current fiscal year, the government earned Rs35 billion.

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said in a statement that the government has to work out long-term plans for POL, energy solution and revenue generation instead of resorting to unwise short-cuts that would have negative impact on overall economy.

“The government has to change its priorities to rescue trade and industry from prevailing economic crisis,” said FPCCI president Ghulam Ali.

Karachi Chamber of Commerce and Industry president Saeed Shafique said the government had enormously increased the cost of doing business and it would ultimately “throw us out of competition in international market.”

“The government must find other revenue generating resources instead of targeting the trade and industry along with the poor of this country,” he said.

Most of industrialists and traders were sure that the government could easily face this fresh wave of oil price hike in the global market by targeting the top corrupts in the tax collecting machinery, the FBR.

Pakistan Tanners Association (PTA) chairman Khurshid Alam said the “petrol bomb” defused two months back by the government after strong agitation, was absolutely detrimental to the leather industry, which is already on the verge of collapse.

Researchers said that after maintaining local oil prices for three months, the government finally increased the rates by an average 9.9 per cent fearing further rise in fiscal deficit.

“Though the step would be unpopular, inducing inflationary pressure, we believe the decision would provide much needed support to the ailing fiscal position,” said an analyst at the Topline Securities.