K-P official says no to freight margin deregulation

Information minister says let political setup do its job.

ISLAMABAD: A top official of Khyber-Pakhtunkhwa, who is working in the central government, has fiercely opposed a move to deregulate inland freight equalisation margin on high octane blending component (HOBC), which will lead to higher oil prices in the province.

Ministry of Industries Secretary Aziz Ahmed Bilour, a close relative of Federal Railways Minister Haji Ghulam Ahmad Bilour, criticised the central government’s plan to abandon control over HOBC’s freight margin during a meeting of the Economic Coordination Committee (ECC) held earlier this month, say sources.

If the government pressed ahead with the plan, it should then provide cheap electricity to the people of Khyber-Pakhtunkhwa, he said.

“Our province is producing cheaper hydropower, so the government should provide electricity at lower prices if it wants to deregulate the freight margin, which will result in higher oil prices in Khyber-Pakhtunkhwa.”

The Awami National Party (ANP), which is the government’s ally in the ruling coalition, had been making similar demand in meetings of the parliamentary committee on oil pricing.

Earlier, the central government expressed its intention to deregulate freight margin on all petroleum products and the matter was sent to the oil pricing committee, represented by all political parties, for discussion.

During the committee’s meetings, the ANP even threatened to pull out of the coalition if the government deregulated the freight margin.

Other political parties, including the Pakistan Muslim League-Nawaz (PML-N) and Jamiat Ulema-e-Islam (JUI), have also protested and opposed the deregulation of freight margin as it will lead to different oil prices across the country.

However, the ECC, in its meeting held on August 7, approved the deregulation of freight margin on HOBC.

According to a participant of the meeting, Information Minister Qamar Zaman Kaira reacted strongly to the demand of secretary industries. “We have a political setup, let it do its job,” sources quoted Kaira as saying.

The ECC was told that HOBC would become expensive by around Rs1.49 per litre in Sindh and cheaper by Rs3.71 per litre in Punjab after deregulation of the freight margin. However, it was not clear how much prices would go up in Khyber-Pakhtunkhwa.

According to calculations of the petroleum ministry, HOBC price will rise by Rs1.49 per litre (1.19%) in Karachi, but it will fall by Rs3.71 per litre (2.97%) in Mahmood Kot (Punjab) where Pak-Arab Refinery Company is working.

The petroleum ministry told the ECC that a judicial commission, constituted by the Supreme Court, had recommended deregulation of the inland freight equalisation margin in a controlled and phased manner.

HOBC, which is used in luxury vehicles and produced only by Parco in a small quantity of about 1,000 tons per month, had no direct impact on the common man, it said.

However, Ogra will continue to monitor prices of petroleum products, including HOBC, along with their transportation cost.

Published in The Express Tribune, August 25^th, 2012.