The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has raised serious concerns about the dire consequences of the recent massive surge in petroleum prices.
President of FPCCI, Irfan Iqbal Sheikh, has voiced his apprehensions, emphasizing that the government seems oblivious to the potential socioeconomic fallout from the third substantial hike in petroleum prices.
The FPCCI predicts that this surge will trigger uncontrollable inflationary pressures, leading to industrial closures, dwindling exports, reduced domestic demand, social unrest, escalating unemployment, and stagnating economic growth.
One particularly troubling aspect highlighted by FPCCI Chief is the alarming increase in the petroleum levy on petrol, which has now reached PKR 60 per liter. These measures, he argues, are ill-advised in a period marked by stagflation and economic recession. Instead, he insists that innovative solutions are needed to stabilize the economy, rather than counterproductive decisions.
The recent announcement by the federal government late last night revealed yet another consecutive and substantial increase in petrol prices, totaling Rs14.91 per liter, and High-Speed Diesel, rising by Rs18.44 per liter for the first half of September 2023.
As a result, petrol prices have surged to Rs305.36 per liter from the previous Rs290.45 per liter, and High-Speed Diesel now stands at Rs311.84 per liter, up from Rs293.40 per liter.
Irfan Iqbal Sheikh pointed out that FPCCI had repeatedly cautioned the authorities in recent months about addressing issues in the import of Russian crude oil. These concerns included the handling of oil cargoes, necessary adjustments in refining processes, and commercial transaction procedures for settling oil payments.
However, these warnings were seemingly disregarded, depriving Pakistan of access to cheaper Russian crude, which is currently 35-40 percent more affordable than international market prices.
Sheikh reminded that just four weeks ago, the authorities had announced a PKR 7.50 per kWh increase in electricity prices, followed by a similar increase in petroleum products, approximately 6-7 percent, just two weeks ago.
FPCCI had persistently called for stabilizing electricity and petroleum prices by addressing distribution and line losses and reducing systemic inefficiencies.
FPCCI Chief raised questions about how export orders can be fulfilled profitably following consecutive increases in electricity tariffs and petroleum prices within a mere four-week span, leading to uncertainty and price volatility.
Expressing deep concerns, Sheikh asserted that the purchasing power of domestic consumers has been severely hampered by inflation, rendering Pakistani products uncompetitive in international and regional markets.
He concluded by reminding that the government has consistently missed macroeconomic indicators and targets for FY23, and the persistently poor economic decisions are set to cast a long shadow over key economic performance indicators for FY24, including exports, industrial production, inflation, employment generation, and revenues.
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