ISLAMABAD: Following a resolution passed by the National Assembly, the Economic Coordination Committee (ECC), is expected to revert to a monthly schedule for the review of oil prices instead of the current weekly review in its meeting on Tuesday (today).
However, despite the National Assembly resolution and the recommendations of a parliamentary panel calling for the replacement of the weekly review mechanism with a monthly one, the Ministry of Petroleum and Natural resources has informed the ECC that it does not agree with the proposals and insists that the weekly pricing mechanism has, in fact, resulted in greater relief for consumers.
During the second week of the ongoing month, the National Assembly had passed a resolution calling upon the government to review petroleum prices on a monthly basis instead of the current practice of revising them weekly. The resolution had also stated that fluctuating petroleum prices had caused increases in the prices of certain commodities besides affecting the industry, agriculture and transport sectors. It further said that the weekly review resulted in uncertainty in costs; and that, therefore, this system should be replaced.
Standing committees on finance and petroleum have also expressed their opposition to the existing mechanism, and have given their backing to the proposal.
When contacted, secretary petroleum Dr Waqar Masood said that “We will present the impact of weekly oil prices review and the resolution passed by parliament to the Economic Coordination Committee (ECC), to be decided as it sees fit.”
The Supreme Court has also taken notice of the tiff over frequent review of prices, and has raised questions asking how the ECC moved ahead with the weekly mechanism without prior consent of the provinces.
On the other hand, sources said the petroleum ministry had pressed the ECC that it be allowed to continue with the existing mechanism. However, the petroleum ministry is expected to face stiff resistance from the Oil and Gas Regulatory Authority (Ogra) and the finance ministry on its refusal to budge from the weekly mechansim.
An Ogra official said that it had already opposed the weekly review of oil prices as no country in the region was following a similar mechanism. He alleged that the current mechanism had benefited refineries, oil marketing companies and hoarders. The official was of the view that the government freeze oil prices for three months to provide relief to consumers.
According to an official of the Federal Board of Revenue, the country has purportedly lost Rs7 billion in revenues due to the current mechanism.
Published in The Express Tribune, October 23rd, 2012.
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