For whose benefit?

Reports that the Economic Coordination Committee (ECC) of the cabinet is to consider a proposal that there be a complete deregulation of the pricing of petroleum products and the removal of the freight equalisation margin are disquieting. The proposal has been opposed by none other than the government-appointed body of experts on matters related to oil products and gas – the Oil and Gas Regulatory Authority -- as well as several marketing companies. The recommendations are said to flow from the findings of a commission set up to investigate an oil-pricing scam that lost the government Rs83 billion during the Musharraf years – which it did but with perhaps unintended consequences. The background is complex, but the proposed deregulation is clearly not in favour of the consumer – because no oil company in its 'right' mind is going to miss a chance to maximise profits, profits derived from the petrol-using public.

The steady hand on the tiller hitherto provided by OGRA will disappear if the proposals are approved, opening the door for the oil-distributing companies to fix petrol prices. If they do we can expect all manner of shenanigans – price differentials between different areas, price wars between competing petrol stations and distribution groups, 'hidden' costs being passed to the consumer and an overall erosion of the rights of the customer. The government's assertion that OGRA is to keep control of diesel and kerosene prices so that companies do not compete to increase their prices at the expense of the poor is disingenuous claptrap. As ever it would seem that graft and preferment lie at the hidden bottom of these proposals, with sources in the oil markets indicating that four companies that have 'influence' in government circles standing to gain most from them. Deregulation would hand a monopoly to those refineries having their own marketing companies, whilst depriving those that did not of market opportunity. No government department in this benighted land is flawless, but OGRA at least ensured a level playing field and offered a degree of transparency. If these proposals are accepted we lose both. For whose benefit, we wonder.