PBF, PPDA warn against deregulation of oil prices
Crude oil prices spiked in the wake of a massive incursion into Israel from Gaza launched by Hamas on October 7. PHOTO: FILE
The Pakistan Business Forum (PBF) and the Pakistan Petroleum Dealers Association (PPDA) stated on Tuesday that any attempt by the Oil and Gas Regulatory Authority (Ogra) to deregulate oil prices is a recipe for economic disaster. Deregulation of oil prices could plunge the nation into a state of hyperinflation and economic instability.
Given the extreme instability of the oil supply chain, manipulation could lead Pakistan to a situation where a small loaf of bread would cost more than a bag full of local currency.
Addressing a hastily convened meeti ng with PBF, Executive Committee Member of PPDA, Hassan Shah, briefed the attendees that deregulation would render refineries and petroleum companies more arbitrary, exacerbating an already dire crisis.
He noted that current cartelisation laws are largely ineffective, and deregulation would jeopardise the country’s future.
He also underscored that the private sector should not control a vital industry like oil, suggesting that for deregulation to proceed, Pakistan must maintain an oil reserve lasting at least 200 days. However, the current capacity allows for stockpiling only enough oil for twenty days. “A free market experiment under these circumstances may fail miserably.”
Likewise, PBF expressed concerns that deregulation would lead to repeated oil price hikes under various pretexts if everyone were granted an open exemption.
Given the country’s unpredictable and unstable oil supply system, which often leads to shortages due to delayed tanker arrivals at ports, lack of dollars for oil payments, and fluctuating global oil prices, deregulation should not offer an opportunity for unjustified profit increases.
Shah further argued that under deregulation, dealers would have the liberty to set oil prices according to their whims in every city and town, exploiting the masses.
Published in The Express Tribune, April 24th, 2024.
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