OTCA says it is not possible to operate at current freight rates and there is a serious risk of financial losses
ISLAMABAD:
The Oil Tanker Contractors Association (OTCA) on Friday threatened to shut down operations and launch protests after a sharp rise in oil prices, warning of potential supply disruptions in parts of the country, according to a statement released by OTCA.
ACTO Chairman Abdullah Afridi said in a statement that diesel prices had increased from Rs 184 to 185. “No tanker will be loaded tomorrow,” he said.
The government on Thursday further increased petrol prices by Rs 137 per liter, or 43 per cent, to a record high of Rs 458.4, after Prime Minister Shehbaz Sharif decided to impose more taxes on consumers.
The new petrol price of Rs 458.4 per liter is also much higher than the increase in the international market as Prime Minister Shehbaz has decided to increase the petroleum tax to a record high of Rs 160.61 per liter of petrol. With the stroke of a pen, the Prime Minister increased the petroleum tax on petrol from Rs 106 to Rs 161 per litre, an increase of Rs 55 in taxes.
This is the second major increase in fuel prices in less than a month after PM Shehbaz hiked diesel and petrol prices by Rs 55 per liter, or 20 per cent. The cumulative increase in the price of gasoline over one month amounts to 63% and that of fast diesel to 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 supplies could be affected in Khyber-Pakhtunkhwa, Punjab and other areas. “It is better to leave vehicles parked than to suffer losses,” he added.
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Afridi criticized the WTO and the authorities, saying the situation amounted 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 Oil Minister Ali Pervaiz Malik had been contacted several times and letters had been sent requesting negotiations. Afridi said changes in pipeline quotas also affected tanker owners, adding: “Until freight rates increase, tankers will not operate.”
He warned of a nationwide strike and protests if their demands are not met, and called on tanker owners to keep their vehicles off the road and take part in protests.
The government raised prices after failing to convince the International Monetary Fund (IMF) to allow it to provide more subsidies. The IMF has capped maximum fuel subsidies at Rs152 billion.
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The failure to convince the IMF also highlights that Prime Minister Shehbaz remained unable to leverage his relationship with US President Donald Trump to convince the IMF to allow the country to absorb the price shock.
It is also the failure of Finance Minister Muhammad Aurangzeb and his ministry, who failed to convince the IMF and failed to achieve fiscal targets. Failure to meet fiscal targets has consumed the additional fiscal space available in the budget.
However, the government’s most shocking action was to increase the levy rate on petroleum to Rs 161 per liter of petrol to raise additional funds to subsidize diesel prices. The government has entrusted gasoline consumers with the essential function of the state, which is to protect its citizens.
The Express PK Press Club reported today that the government had assured the IMF that it was prepared to increase fuel prices. It was one of the poorest negotiated agreements at the level of services, in which the government pretended to the IMF that everything was normal for the economy despite the worst oil crisis since 1973.
