PBF and PPDA warn of oil price deregulation

LAHORE:

Pakistan Business Forum (PBF) and Pakistan Petroleum Dealers Association (PPDA) said on Tuesday that any attempt by the Oil and Gas Regulatory Authority (Ogra) to liberalize oil prices is a recipe for financial disaster. Deregulation of oil prices could plunge the nation into hyperinflation and economic instability.

Given the extreme volatility of the oil supply chain, manipulation could lead Pakistan to a situation where a small loaf of bread would cost more than a bag full of local currency.

Addressing an emergency meeting with PBF, PPDA Executive Committee member Hassan Shah informed the audience that deregulation will make refineries and oil companies more arbitrary, exacerbating an already dire crisis.

He noted that current antitrust laws are largely ineffective and deregulation would jeopardize the country’s future.

He also emphasized that the private sector should not control a vital industry like oil, suggesting that for deregulation to proceed, Pakistan should maintain at least 200 days worth of oil reserves. However, the current capacity allows only enough oil to be stored for twenty days. “A free market experiment under these conditions can fail miserably.”

Similarly, PBF expressed concerns that deregulation would lead to repeated oil price hikes under various pretexts if everyone was granted an open exemption.

Given the country’s unpredictable and volatile oil supply system, which often leads to shortages due to late arrivals of tankers at ports, lack of dollars for oil payments, and fluctuations in world oil prices, deregulation should not provide an opportunity for undue profit increases.

Shah further argued that under deregulation, marketers would have the freedom to set oil prices as per their whims in every city and town, exploiting the masses.

Published in The Express Tribune, April 24^u2024.

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