20000331

Petroleum

prices will be

reduced soon,

says Shaukat

SHAHID IQBAL

KARACHI: The government will bring down the petroleum prices soon in the wake of recent decision of Opec which resulted in decline of petroleum prices by 20 percent.

The Finance Minister, Shaukat Aziz said in Karachi on Thursday that the Ministry of Petroleum has already started working on the subject.

At first prices of the furnace oil will be reduced. "The government is committed to reduce the prices in the wake of recent decline in the international oil prices," said the minister.

Opec in its recent meeting, decided to increase its production by 1.45 million tonnes per day which trimmed the oil prices from $30 per barrel to $24.

On March 20, the government announced an average increase of five percent on petroleum prices. Maximum increase was made in the prices of high speed diesel which jumped form Rs.11.50 to Rs.12.80 per litter.

The oil prices went 9 years high before the Opec decision and touched $32 per barrel.

Answering a question that how much reduction in prices is expected, the minister said it depends on the international prices.

The government raised the prices of petroleum products just 9 days before the scheduled meeting of Opec. There were open indications that Opec will increase the production to bring down the prices and the prices started slipping before the decision.

"If the government only withdraw the rise in petroleum prices made on March 20, then it will be unfair," said an industrialist who had been demanding to withdraw the increase made on March 20.

The industrialists and traders had termed the increase as artificial and without reason.

"This will be a test case for the government. It has already increased twice the petroleum prices since it is in power and furnace oil prices for three time," said an oil expert.

The avearage price increase on furnace oil was about 20 percent and other increases on products remained from 8 to 17 percent.

The government has been benefiting from the wind fall of the oil prices. It sells petroleum prices at much higher prices to the local market than the international market.

Last fiscal year (1998-99) it earned Rs.72 billion from petroleum trading. This year Rs.63 billion has been set to earn from this petroleum dealing.