What's new

No removal of subsidies before IMF talks

niaz

PDF THINK TANK: CONSULTANT
Jun 18, 2006
5,131
210
11,161
Country
Pakistan
Location
United Kingdom
Recommends to who?

But on the flip side of the argument, privatizing these mechanisms and having a free market requires that you have a strong regulator in place. In a country like Pakistan, that is seldom the case, hence the need to have a strong grip on affairs within the market itself, to prevent manipulation and price gouging.

Recommends to the Petroleum Ministry which is responsible for setting the fuel prices in the country.

Why do you think that a regulatory body is necessary? Had there been privately /foreign owned petroleum storage & distributing companies only; there was a strong possibility of a 'Cartel' arbitrarily fixing ex-pump selling price. In Pakistan largest market share is held by PSO, which is GOP owned. Even though private marketing companies can import /purchase petroleum products from any source whatsoever but they would have to compete with PSO ex-pump prices. Hence unless PSO joins the cartel, no nationwide price fixing is possible.

In UK there is no regulatory authority; it is the competition that sets the ex-pump selling price. In general retail outlets owned by the 'Super Markets' such as Tesco, ASDA etc are about 3 to 4 pence per litre cheaper. On the other hand the same companies sell at higher prices in rural area and at the motor way petrol stations.
 

Jango

SENIOR MODERATOR
Sep 12, 2010
18,096
41
23,708
Country
Pakistan
Location
Pakistan
Why do you think that a regulatory body is necessary? Had there been privately /foreign owned petroleum storage & distributing companies only; there was a strong possibility of a 'Cartel' arbitrarily fixing ex-pump selling price. In Pakistan largest market share is held by PSO, which is GOP owned. Even though private marketing companies can import /purchase petroleum products from any source whatsoever but they would have to compete with PSO ex-pump prices. Hence unless PSO joins the cartel, no nationwide price fixing is possible.

Why not then remove the regulator (i.e. the act of recommending oil prices to the Ministry of Energy) and let the market decide the price?

If PSO is the largest player in the market, and is a govt entity, it can choose the prices at the market rate, and others will follow.

My point was in agreement with you, leaving the OMC's completely free without a regulating mechanism is bound to create cartelization, because let's face it, is mulk main no one plays by the rules.
 

niaz

PDF THINK TANK: CONSULTANT
Jun 18, 2006
5,131
210
11,161
Country
Pakistan
Location
United Kingdom
Why not then remove the regulator (i.e. the act of recommending oil prices to the Ministry of Energy) and let the market decide the price?

If PSO is the largest player in the market, and is a govt entity, it can choose the prices at the market rate, and others will follow.

My point was in agreement with you, leaving the OMC's completely free without a regulating mechanism is bound to create cartelization, because let's face it, is mulk main no one plays by the rules.


Best thing would have been to let market forces decide oil prices ; this would have avoided circular debt as well as carrying the blame for the higher fuel prices.. But Pakistanis like to control every thing., That is why 18th amendment was so long in coming.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom