OTCA says it is not possible to operate at current freight rates, there is a serious risk of financial losses
ISLAMABAD:
Oil Tanker Contractors Association (OTCA) on Friday threatened to halt operations and launch protests after a sharp increase in petroleum prices, warning of potential supply disruptions across parts of the country, according to a statement issued by OTCA.
OTCA President Abdullah Afridi said in the statement that diesel prices rose by Rs 184–185. “No oil tanker will be loaded tomorrow,” he said.
The government on Thursday further increased petrol prices by Rs137 per litre, or 43%, to a record-high of Rs458.4, after Prime Minister Shehbaz Sharif decided to impose more taxes on consumers.
The Rs458.4 per litre new price of petrol is also far higher than the increase in the international market, as PM Shehbaz decided to increase the petroleum levy to a record Rs160.61 per litre on petrol. With one stroke of a pen, the premier increased the petroleum levy on petrol from Rs106 to Rs161 per litre — an increase of Rs55 in taxes.
It was the second major increase in the fuel prices in less than a month after PM Shehbaz increased the diesel and petrol prices by Rs55 per litre or 20%. The cumulative increase in the petrol price within a month stands at 63%, and that of the high-speed diesel at 75%.
He also announced protests against oil marketing companies (OMCs) and demanded an increase in freight rates. “It is not possible to operate at current rates; there is a serious risk of financial losses,” Afridi said.
He warned that fuel supply could be affected in Khyber-Pakhtunkhwa, Punjab and other areas. “It is better to keep the vehicles parked than incur losses,” he added.
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Afridi criticised OMCs and the authorities, saying the situation amounts to “oppression and injustice”. He said, “We have been in contact with the authorities for a week, but no positive progress has been made”.
He added that Petroleum Minister Ali Pervaiz Malik had been contacted multiple times, and letters had been sent requesting negotiations. Afridi said changes in pipeline quota were also affecting tanker owners, adding, “Until freight rates are increased, tankers will not operate.”
He warned of a nationwide strike and protests if their demands are not met, and appealed to tanker owners to keep their vehicles off the roads and take part in the protests.
The government increased the prices after it failed to convince the International Monetary Fund (IMF) to allow it to give more subsidies. The IMF capped the maximum subsidies on fuel at Rs152 billion.
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The failure to convince the IMF also underscores that PM Shehbaz remained unable to leverage his relations with United States President Donald Trump in convincing the IMF to allow the country to absorb the price shock.
It is also the failure of the Finance Minister Muhammad Aurangzeb and his ministry, which could not convince the IMF and failed to meet the tax targets. Failure to meet tax targets consumed the additional fiscal space available in the budget.
However, the most shocking action of the government was to increase the petroleum levy rate to Rs161 per litre on petrol to raise additional funds for cross-subsidising the diesel prices. The government outsourced the state’s core function to protect its citizens to the petrol consumers.
The Express Tribune reported today that the government assured the IMF that it stood ready to increase the fuel prices. It was one of the poorest negotiated staff-level agreements, where the government pretended before the IMF that everything was normal with the economy despite the worst-ever fuel crisis since 1973.
