Daily changes in POL prices creating uncertainty for businesses, consumers

Frequent changes in petrol and high-speed diesel (HSD) prices have become increasingly difficult for small traders, industrialists, transporters and households, with business representatives calling for a more stable and predictable petroleum pricing mechanism.

 

President of the Hyderabad Chamber of Small Traders and Small Industry, Muhammad Saleem Memon, said the continued volatility in petroleum prices was making it challenging for businesses to plan costs and for households to manage their budgets.

 

He urged the government to develop a balanced mechanism that considers international oil market movements while protecting local consumers and businesses from the immediate impact of sharp fluctuations in global petroleum prices.

 

Memon said the primary concern was not solely the increase in fuel prices but the uncertainty created by frequent changes. Traders and manufacturers are unable to accurately estimate future transportation, logistics and raw material costs, while transporters also face difficulties in determining freight charges.

 

He noted that increases in petrol and diesel prices have a wider impact across the economy, affecting transportation of raw materials and finished products, factory operations, agricultural machinery, warehousing, distribution networks and employees' daily commuting expenses.

 

The resulting increase in production and transportation costs eventually leads to higher wholesale and retail prices, transferring the burden to consumers.

 

According to Memon, small businesses and industries are particularly vulnerable as they operate on limited profit margins while already facing challenges including high energy costs, working capital constraints and other operational pressures. Sudden fuel price increases, he said, further erode their profitability.

 

He also pointed out that while increases in fuel prices are quickly reflected in market prices, the benefits of subsequent reductions often take longer to reach consumers. Businesses that purchase raw materials or transport goods at higher fuel costs cannot immediately reduce their overall expenses when prices decline the following day.

 

Memon said frequent petroleum price fluctuations were undermining business confidence and making long-term planning for investment, production and employment increasingly difficult.

 

He further highlighted the significant share of taxes and duties in domestic petroleum prices, noting that these account for approximately Rs114 per litre on petrol and around Rs100 per litre on diesel, according to recent estimates.

 

Calling for policy reforms, he urged the government to introduce an effective petroleum price stabilisation mechanism, provide targeted relief to small industries and SMEs, and engage business representatives while developing future fuel pricing policies.

 

He stressed that businesses require not only affordable energy but also stable and predictable costs, adding that uncertainty in petroleum prices could adversely affect investment decisions, production planning and employment.