Oil firms threaten to close business in Pakistan

Islamabad, 15 May (AKI/DAWN) - Oil marketing companies and refineries have reportedly threatened to pull out their one billion dollars in investment in Pakistan if the government accepts the National Accountability Bureau's (NAB) proposal to recover 4.5 billion Pakistani rupees (over 74 million US dollars) from them. According to the Pakistani daily, Dawn, major private and foreign companies — Shell, Caltex, Attock Oil, Parco and Bosicor — have either held meetings with or written letters to the prime minister and the petroleum ministry asking them to shelve the ongoing NAB investigations into oil pricing and restore old profit rates.

As a result, sources said, the government was likely to close the investigations into the oil pricing scam, after they had already shelved an earlier investigation into sugar pricing last month.

Sources said the NAB had asked the government to recover 4.5 billion rupees (over 74 million US dollars) from the refineries and marketing companies for not passing on the benefit of international price reduction to the consumer for nine fortnights since May 2004.

The companies have taken the stand that if the government decides to recover the amount, they would prefer to wind up their businesses because they work strictly in accordance with the policy and price fixation formula provided by the federal government.

The oil industry has also contended that they were allowed 3.5 percent commission which was calculated after the inclusion of general sales tax in the price build up. However, a recent government decision to exclude GST from the price build up has reduced their profit margin to 2.7 percent. Similarly, the exclusion of GST from the price mechanism has reduced the dealers' commission from four to three per cent.