OTCA says it is not possible to operate at current freight rates, there is a serious risk of financial loss
Oil tankers are seen parked after the protest by the All Pakistan Oil Tankers Owners Association demanding increase in fares, expansion of quota in land transportation of white pipelines and permission to use old vehicles in Karachi September 19, 2023. Photo: Reuters
ISLAMABAD:
The Oil Tanker Contractors Association (OTCA) on Friday threatened to halt operations and launch protests following a sharp rise in oil 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 increased by Rs 184-185. “No oil tanks will be loaded tomorrow,” he said.
The government on Thursday further hiked petrol prices by Rs137 per litre, or 43%, to a record high of Rs458.4 after Prime Minister Shehbaz Sharif decided to impose more charges on consumers.
The new price of Rs458.4 per liter of petrol is also far higher than the increase in the international market when Prime Minister Shehbaz decided to raise oil tax to a record Rs160.61 per liter on petrol. With the stroke of a pen, the prime minister raised the oil tax on petrol from 106 to 161 kroner per liter – an increase of 55 kroner in taxes.
It was the second major hike in fuel prices in less than a month after Prime Minister Shehbaz hiked diesel and petrol prices by Rs 55 per liter or 20%. The cumulative increase in the price of petrol within a month is 63% and that of high-speed diesel 75%.
He also announced protests against oil marketing companies (OMCs) and demanded an increase in freight rates. “It is not possible to operate at the current prices; there is a serious risk of financial loss,” 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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Criticizing OMCs and the authorities, Afridi said the situation amounts to “oppression and injustice”. He said: “We have been in touch with the authorities for a week but no positive progress has been made”.
He added that Oil Minister Ali Pervaiz Malik had been contacted several times and letters had been sent requesting negotiations. Afridi said pipeline quota changes are 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 join the protests.
The government raised prices after failing to convince the International Monetary Fund (IMF) to allow it to provide more subsidies. The IMF capped the maximum subsidies for fuel at Rs 152 billion.
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The failure to convince the IMF also underscores that Prime Minister Shehbaz remained unable to leverage his ties with US President Donald Trump to convince the IMF to let the country absorb the price shock.
It is also the failure of Finance Minister Muhammad Aurangzeb and his ministry who could not convince the IMF and failed to meet the fiscal targets. Failure to meet tax targets ate up the extra fiscal space available in the budget.
But the most shocking action by the government was to increase the oil tax rate to Rs161 per liter on petrol to raise additional funds for cross-subsidizing diesel prices. The government outsourced the core function of the state to protect its citizens to the petrol consumers.
Express Pakinomist reported today that the government assured the IMF that it was ready to raise fuel prices. It was one of the worst negotiated deals at staff level, with the government pretending to the IMF that everything was normal with the economy despite the worst fuel crisis ever since 1973.
