The price spike of petrol is humiliating for the government

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PML-N leader Senator Mushahidullah Khan tweeted regarding the price fluctuations of petrol, As these activities have brought up many humiliations, Even if it were to be cheap or expensive. Mushahidullah Khan also commented on what kind of a life is our Prime Minister living.

https://twitter.com/Mushahid_Ullahh/status/1276572453632950273?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1276572453632950273&ref_url=https%3A%2F%2Fbaaghitv.com%2Fkuch-din-pehlay-petrol-sasta-honay-par-zaleel-ho-raha-tha-ab-mehnga-hona-par-zalel-ho-ga-mushahidyllah-khan%2F

Commenting on Mushahidullah Khan’s tweet, a user said, “Either God have mercy on the nation, or our prime minister should not take notice on anything. as whatever notice he has taken price of that commodity has sky rocketed.

Another user tweeted, all opposition members have passed away by the will of God. If they were alive today, they would be on the streets for the people. They were the voice of the people.but would be only alive in the assemblies and on Twitter. May Allah grant patience to the people for the atrocities committed against them. Amen.

It should be noted that the PTI government dropped a petrol bomb on the people and for the first time in the history of Pakistan increased the lump sum prices by Rs 25. The people, including the opposition, are protesting against the increase in petrol prices, but the PTI is cleaning up. That the prices were increased after the increase in oil prices in the world market

When Prime Minister Imran Khan was in the opposition, he used to wail after the rise in oil prices and call it a robbery on the poor. Many of his statements and tweets in this regard are on record. After COVID19 the prices were to be lowered down to give a relaxation to the people. However, the mafia created a shortage of petrol. This month, people had to wait in long lines and have an access to predetermined liters per person set by petrol pump owners. Cheap petrol did not benefit the people, now the government. Has come under pressure from the petrol mafia to raise its own prices, which has been rejected by opposition parties.

The people of Pakistan are already worried because of the lock-down. As these lock-downs have closed down businesses, millions of people have lost their jobs. Adding to that the government comes up with such policies which include a price spike of petroleum product, which is favoring these mafias.

‘PM surrendered to the Mafia, if you can’t take positive Action, you have to go Home’: Qamar Zaman Kaira

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1 comment

  1. samir sardana 29 June, 2020 at 23:07 Reply

    The hike in Petrol etc.,can be calibrated and differentiated by the IRP.In COVID times – the IRP (Islamic Republic of Pakistan),can raise resources,from only 5 sources

    Hike in Taxes of fuel and liquor
    Hike Rates of Power
    Hike in Import Duty on Edible Oil
    Cutting govtt staff costs
    Cutting Govtt costs

    The Public will not tolerate any other tax hike.dindooohindoo

    Since there is a demand drawdown (id.est.,the absolute demand has reduced),so the post hike rates, might be even more than,the pre-Covid cost,to a retail user

    Had the IRP locked into the Oil futures on BMD/NYMEX/CBOT – it would have been a party for IRP (id,est., not deliverable forwards – as there is no storage capacity in the world on tankers or in bond).BMD is controlled by Mahatir – the ally of IKN.

    People are needlessly abusing IKN (Imran Khan Niazi).This man will FREE the Kashmiris from the yokels of the Kaffir genocide.He is the man – and providence has got him to that seat

    News anchors crib about the rates of fuel in EU and USA,and link it to Purchaing Power Parity (PPP).Oil is sold in USD – and so downstream oil products have to be compared on USD terms.PPP is irrelevant. THE FACT is that the price of petrol and diesel in IRP,is the lowest in the SAARC,and also lower than many nations in the EU.

    However,if like in IRP,there are local refiners – then also,we have to look at the FOB rates of petrol and diesel,as there is an opportunity cost of export.IRP oil refineries are making a profit at these rates – and the tax on that profit,is going to the IRP.ONE COULD ARGUE that the Oil PSUs can sell at Marginal Cost of refining,plus some Fixed cost recovery (FCR)- so that the burden on the retail is MINISMISED.

    The ethical reason for the above,is that that IRP oil refiners,are listed on the KSE.So if Oil PSU makes
    a profit on the misery of the people of IRP – and then speculators punt on it,and also earn quarterly dividends on it – which 98% of the people of IRP cannot avail of – that would be against Islamic business principles.Hence,the Oil PSU has to sell on Marginal cost plus some FCR.

    The moral reason,is that an Oil PSU in IRP,in the COVID market,SHOULD not make windfall gains at the
    expense of the people of IRP,based on inventory gains.This requires no ACUMEN or intellectual
    angulature.

    If the Oil PSU is selling the Oil to the distributors and there is no clause in the agency or dealership agreement to return to the IRP the windfall profit earned – that would be criminal.

    For the news anchors of IRP – take the case of Gold.The price of RAW Gold (prime ingots and bars) all over the world is the same – net of all taxes.The difference of 2-5% is due to Air freight,assay cost,FX volatility(not translation) and traders margin.Similarly the price of petrol and diesel is the SAME ALL
    over the world – net of taxes AND SUBSIDIES,with a margin of 5-11%,to account of differential freight and profit margin.

    However,instead of hiking the rates en masse,on an ad vaolorem basis – IKN should have done the following :

    Imposed a 1 time,1 year tax,on all private luxury cars,using Diesel (based on deemed fuel usage)
    Imposed a 1 time,1 year tax,on all private cars using,Diesel (based on deemed fuel usage)
    Imposed a 1 time,1 year tax,on all private luxury cars,using Petrol (on an adhoc basis)
    Imposed a 1 time,1 year tax,on all private cars,using Petrol (on an adhoc basis)

    Government vehicles can be exempted as it is just a transfer pricing mechanism.The Result will be that the people will stop using the cars,and the 2nd market for the resale,will disappear and new car sales,are in any case,in a slump.

    W.r.t. diesel pumps in farm areas – the price should stay constant or the IRP can give free power for pumping.The Marginal cost of making diesel and stocking and transporting it to farmers is far beyond the MARGINAL COST OF FREE POWER,to the farmer.The Marginal Cost of transporting power is only the T and D loss PLUS the Marginal Cost of generation.In a case of falling power demand – the high cost power plants will be shut down – and the marginal cost of hydel is ZERO and that of other fuels,will be Rs 2-5 per unit

    W.r.t agri transport – there are 2 parts.For the cost of transportation to the farmer – the the propreitor has to pay a 1 time tax based on expected fuel usage.For the transportation from the farmer to the City etc., fuel dumps in those demarcated areas CAN REDUCE the COST OF DIESEL only – so that the lowered logistics cost,of farm output – will offset the hike in logistics costs of farm inputs.Farmers in IRP are exploited at the point of sale of produce – and so,it is key that the output logistics costs,are kept,as low as possible.

    Make the Oil PSUs of the IRP ensure,that NO WINDFALL profits are earned,by the PRIVATE SECTOR
    oil distributors,in the IRP

    If the Oil hike CANNOT BE rolled back – then the INCREMENTAL PROFIT earned by the OIL PSUs,can
    be passed to the Marginal sections,in terms of free power in some geographies and power loads, a 50% hike in interest rates in small saving schemes and a 1 time bonus to marginal sections on insurance policies

    Net Result

    Aam junta will get diesel and petrol,at the old rates
    Farmers will be insulated,from fuel hikes
    Farmer rise in input costs on logistics,can be offset by the IRP,by higher Farm gate prices
    or free power or cash subsidies
    IRP will save on tax administration,as a 1 time tax will be collected
    Money saved by Aam junta on diesel,can be spent,in part on rise in food etc

    When all options are exhausted – then the retail prices can be hiked en masse.There are still,many cards in the shoe.

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