The government was stopped from taking a decision on the schedule for revising oil prices by the Law Minister Farooq H Naek to shelter the Parliament from disgrace and shield consumers from an additional burden of billion of rupees.
The Economic Coordination Committee (ECC) in an emergency meeting held on Thursday was bent on implementing the fortnightly revision mechanism instead of National Assembly’s recommendation of reintroducing the monthly-basis system.
Sources said that Naek reminded the ECC of a resolution passed by the Parliament to determine oil prices on a monthly-basis against weekly and stopped the meeting to take any decisions against Parliaments’ resolution that may spark controversy.
“As parliament has passed a resolution for the determination of oil prices on a monthly review mechanism, therefore we should take the prime minister on board while taking a decision to review oil prices on a fortnightly basis,” sources said quoting the law minister.
The meeting was earlier scheduled to be on November 26, but it was convened in an emergency to conclude the oil prices review matter and ‘some other important issues that would put additional burden on consumers,’ said sources.
Previously, ministries of petroleum and finance had recommended switching to monthly mechanism to provide relief to the consumers.
If approved, fortnightly review, just like the weekly review, will result in pocketing of billions of rupees from the consumers for the benefit of the oil industry, said sources. Quoting some examples, sources said the price of petrol would have been Rs100.18 per litre if determined on a monthly-basis instead of Rs104.55 per litre because of weekly or fortnightly mechanisms in September 2012, a difference of Rs4.4 per litre.
In October, petrol prices had been calculated at Rs 100.01 per litre as per the monthly-basis review against Rs105.49 per litre on a weekly or fortnightly basis. In case of diesel, the price would have been Rs109.09 per litre following monthly prices review against Rs112.13 per litre based on weekly or fortnightly pricing mechanism in September.
According to one of the attendees, the petroleum ministry in its summary had not specifically recommended any proposal for the review mechanism; however the summary listed advantages relating to the weekly mechanism only, which sparked controversy forcing the Parliament to pass a resolution and the Supreme Court to take a suo motu notice against it.
Earlier, the petroleum ministry had given an undertaking to the Supreme Court to suspend the weekly oil prices review informing it about the resolution passed by the Parliament. The ministry also informed the court a summary will be moved to the economic committee for a fresh decision.
“However, during the meeting, the high ups of the petroleum ministry pressed the ECC to take a decision to determine oil prices on a fortnightly-basis against monthly, which the parliament had recommended in its resolution,” sources said, adding that the petroleum ministry got a summary for fortnightly review mechanism approved by the ECC backed by oil refineries and oil mafia that minted money from consumers twice a week by hoarding products and now they were again pressing the ECC to decide in their favour.
Oil and Gas Regulatory Authority (Ogra) had also announced support for the monthly review mechanism. “Earlier, we had proposed the government to review oil price on a quarterly-basis to provide relief to the consumers but the proposal was not considered,” an Ogra official said adding that the regulator was already against the proposal of weekly or fortnightly oil pricing mechanism.
Federal Board of Revenue (FBR) had also pointed out that government exchequer had lost Rs7 billion due to monthly oil prices review system.
Published in The Express Tribune, November 24th, 2012.
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