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The devastating impact of rising fuel prices

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In Pakistan, petroleum prices were raised yet again to Rs248.74 per litre for petrol and Rs 276.54 for diesel. This is the fourth time petroleum prices have been raised in a period of 1-1.5 months under IMF guidelines or pressure.

Subsidies have been eliminated almost altogether, although there may be some residual subsidies that are to be adjusted. The agreement with the IMF requires full price recovery plus PLD taxation of Rs30-50 per litre and GST of 17%. This means more has yet to come.

While the elimination of subsidies may be a rational and reasonable IMF requirement, demanding PLD and GST in such an abrupt manner when international oil prices are extremely high, is rather ruthless and shows a high degree of insensitivity to the poor of this country.

While in USD terms, Pakistan prices may not be so high, in local rupee terms, the current prices are more than 100% of the usual prices and have increased rather abruptly. The wages of the poor, however, have not increased at all and cannot increase in tight economic circumstances.

The IMF can very well argue that it is Pakistan which has brought its economy to a level that it had to approach the Fund. And it is not the first time that Pakistan has gone to the IMF. This is the 16th or 17th time an IMF loan is being sought over the last 30 years or so. Successive governments in Pakistan have been pursuing an elite agenda, not collecting taxes and extending subsidies that benefit the rich and powerful.

The question the IMF must consider: how is any of this the fault of the poor? The poor in Pakistan should have resisted and revolted.

The fact is that Pakistan has no choice. It has to accept the IMF conditions or be ready to face default. The default may not be a good idea, although some nihilist but respectable economists have argued in favour of default rather than meeting the IMF conditions.

Let us come back to the petroleum pricing issue. One way of answering the price growth issue is to look at the prices in comparable countries or in the region. In India, the current average/typical gasoline prices are at Pak Rs277 per litre. Indian prices have always been higher than Pakistan, for which there is no apparent reason except for higher taxation in India.

Otherwise, the Indian petroleum industry is much larger and more efficient than Pakistan’s. India exports petroleum and is highly competitive, although not much is known here about India; financing military expenditure and cross-subsidizing exports could be some of the possible reasons. It should be noted that India is getting 30% cheaper crude oil from Russia. However, it may not be more than 10% of their current requirement. It is on the rise though by the day.

The lowest petroleum prices in the region are in Bangladesh. The Bangladesh government has started indicating that subsidies are becoming unsustainable. An oil price rise is expected there. In most countries, diesel prices have been kept lower than that of gasoline on the simple premise of public use of diesel in passenger transport and goods traffic.

In Pakistan, for one reason or the other, this logic has not been accepted. However, the current high diesel prices in Pakistan are due to high diesel prices. We have to put off this discussion for a later date when prices stabilize. It may be noted that in Sri Lanka, despite the widely known economic conditions and default, diesel prices are still lower than in Pakistan and elsewhere except in Bangladesh. Both Bangladesh and Srilanka have maintained quite low diesel prices. Export competitiveness appears to be the major driver in their energy pricing policies.

In the US, petroleum prices have been lower than elsewhere in the advanced countries due to the highly competitive oil industry and local abundance of oil production. American benchmark crude oil prices have always been lower than elsewhere. The US retail prices of petroleum products have always been considered benchmark prices.

This time, diesel prices are 10 per cent higher than gasoline in the US. This is due to higher market prices of diesel which are a result of demand, supply and other issues. Usually, diesel and gasoline prices are almost the same in the US as opposed to Europe and other advanced countries.

In such a bleak scenario, there are very few options and prospects for good. However, there is a possibility that the oil price may go down. It may take a year or so to stabilize around $90-95 as indicated by future contracts.

The rupee may get strengthened as has happened recently among the good news of the IMF’s agreement finalization process. The rupee may improve if all other financial sources follow IMF funding. The government may be able to pass on the savings to the consumers or use it to meet other deficits and subsidies.

There are some cost reduction opportunities as well, however small these may be: efficient buying, reduction of demurrage and other losses, and negotiating fair margins by the oil refineries and E&P companies.

An unfortunate aspect of Pakistan’s local crude oil pricing formula is that the wellhead prices are paid at international prices. There is no price advantage. As foreign oil producers are squeezing us, local ones are doing the same, even when it is public-sector companies. Similarly, oil refineries are making hay while the sun shines.

There is an S-curve ceiling and flour pricing formula in the case of local gas. Why is this not so for oil? It would protect both the producer and the consumer. Reportedly, there is a windfall profit formula which apparently has not been activated. Every penny is important in the energy business, as it is consumed in millions and billions of units; be it barrels, cubic feet, kWh or MMBtu.

Finally, how to protect the poor from such excruciating prices? We have been proposing for quite a while a low-price gasoline brand for motorcycles and smaller and older vehicles. This is a low–RON gasoline. Apart from being cheaper, it provides direct and targeted subsidies for the needy.

IMF supports targeted subsidies but opposes unintended benefits for high-income groups. The government of Pakistan has not yet been able to make a decision about this. Instead, it has announced a stipend of Rs2000. This has not yet been implemented or is not visible.

This was announced simultaneously with the increase of the first Rs30 increase. There is a need to suitably enhance this amount.

Energy conservation measures have been announced which may reduce consumption, although that does not directly affect prices. However, a reduction in consumption would reduce imports, reduce the current account deficit and affect the exchange rate in a positive manner. Reduced exchange rates would also reduce retail oil prices. The price raise itself may reduce demand. On the lighter side, all poisons have antidotes.


The writer is a former member of the Energy Planning Commission. Email: akhtarali1949@gmail.com.

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Today is the observance of World Day Against Child Labor.

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Today, the World Day Against Child Labour is being commemorated globally, including in Pakistan.

The goal of celebrating this day is to promote awareness about child labour and inspire efforts to eliminate this societal injustice.

The number of child laborers in Pakistan has surpassed 20 million as a result of poor legislation and inadequate remedies. The prevalence of child labor in Punjab is 14 percent.

Child labour is on the rise, despite governments’ announcements of measures to address the issue, they have failed to take significant action.

The head of a non-governmental organization (NGO) stated that the issue of child labor necessitates the implementation of a comprehensive and enduring strategy.

Over 10 million children in Punjab are currently not attending school and are instead forced to engage in laborious work.

Additionally, the provincial minister for education has declared intentions to offer exclusive remuneration for enrolling children in schools, while also ensuring that pupils receive instruction in practical skills.

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TikTok plans to introduce an image search capability in order to directly compete with Google.

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TikTok, a Chinese short video platform, is now conducting a trial of a novel functionality that enables users to capture or submit images in order to discover comparable products within the TikTok Shop, as reported by TechCrunch.

TikTok, the current leader in social media, is now aiming to enter Google’s domain in the field of search, indicating a direct competition against Google’s control in visual search.

The functionality, originally observed by user Jonah Manzano, is presently accessible to users residing in the United States and Southeast Asia. Users that have access to the feature will see a camera symbol that is integrated.
This feature allows users to effortlessly search for products by capturing or uploading photographs, eliminating the requirement for written descriptions.

For example, if you are eating at a restaurant and like the dish that is presented on a certain plate, you can take a fast photo using the TikTok app to discover comparable goods that you can buy.

Similarly, if you come across an expensive item while shopping online, you can save its image and use TikTok’s image search feature to locate similar, more affordable options.

Although TikTok Shop has previously utilized conventional search methods, this new advancement represents a notable deviation by harnessing the capabilities of visual search, similar to Google Lens.

TikTok’s decision is a calculated maneuver aimed at not only attracting users’ interest in finding new products but also promoting sales within its e-commerce network.

This development is not only a criticism of Google or Amazon; it is a more extensive effort to rival other participants in the field of visual search and e-commerce, such as Klarna and rising businesses like Cherry.

TikTok’s shift towards e-commerce is apparent in its recent announcement that TikTok Shop accommodates more than 15 million vendors worldwide, including a significant presence in the United States.

The company has made significant investments in platform safety, dedicating more than $400 million and establishing a staff of 7,500 personnel to guarantee the integrity of TikTok Shop.

TikTok continues to pursue its e-commerce goals, while encountering regulatory obstacles, especially in the United States.

TikTok’s momentum remains unaffected by President Biden’s recent measure, which indicates a possible prohibition if ByteDance does not divest the platform.

However, the corporation regards e-commerce as a strategic source of income and a method to maintain consumer involvement within its ecosystem.

TikTok is continuously expanding and improving its TikTok Shop to encourage more user interaction and spending. This will help establish TikTok as a strong competitor in the e-commerce industry.
in the search bar of TikTok Shop.

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The Traffic Response Unit in Lahore was inaugurated by the Chief Minister of Punjab.

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On Wednesday, the Traffic Response Unit was inaugurated in Lahore by Punjab Chief Minister Maryam Nawaz.

During this event, the chief minister examined the motorcycles of the traffic response team. She engaged in a discussion with the wardens and questioned about the training and other related topics.

In addition, she monitored the message via a public address system in the event of a traffic congestion. Following the establishment of the Traffic Response Unit, a dedicated meeting was convened to discuss traffic management, with CM Maryam Nawaz presiding as the chairperson.

The chief minister established a specific time limit to enhance the movement of vehicles in Lahore. Maryam Nawaz instructed to offer an alternative location for wheel-carts to ensure the smooth movement of traffic.

In addition, she oversaw the implementation of measures to enforce lane discipline in all situations and initiated an awareness campaign targeting rickshaws and motorbikes to encourage them to stay inside their designated lanes.

The discussion involved an evaluation of the installation of the Intelligence Traffic Signal Management System in Lahore. She instructed relevant agencies to develop efficient and enduring strategies to address the problem of encroachments on highways.

CM Maryam also instructed the restoration of the screens that were established for traffic instruction. During the meeting, CTO Ammara Azhar provided a briefing stating that the specialized traffic response team will promptly respond to traffic congestion within 15 minutes of receiving a call.

The specialized unit, comprised of 50 robust motorcycles and 100 enforcers, would promptly undertake measures to alleviate the traffic congestion. In order to fulfill this objective, the Traffic Response Unit has undergone a specialized training program lasting one month.

Additionally, the Chief Technology Officer stated that the Traffic Response Unit received first aid training from the Red Crescent. Each motorbike will be equipped with a public address system and a first aid box. The traffic wardens will also capture footage using a specialized camera.

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