Anas Imtiaz

Petrol Prices in Pakistan: An Analysis

// July 23rd, 2008 // 17 Comments » // Pakistan

The petrol prices have shown a predictable rise in the recent past, but the amount of rise is unpredictable according to some analysts. What I want to analyze here is the prices of petrol in the near future. With all sorts of political uncertainties and crumbling economy the prices of petrol in Pakistan is likely to increase by a greater percentage than the international market.

The petrol price internationally in February 2008 peaked at $103.05 per barrel while the price in July reached about $147.02 per barrel (at the time of writing this article). This shows an increase of 42.67%. In the same interval Pakistan’s petrol prices per liter have jumped up from Rs.53.70 to Rs.86.66 which is a rise of 61.38%. This just proves the above point, and with no end to political crises and rising international petrol prices in sight, the effect on local petrol prices can well be imagined. The following figure shows the petrol prices in the country after the February 18 elections. All statisticians can extend that line of rising gradient and predict the future prices easily.

According to FuturePundit the petrol prices in 2012 is predicted at $225 per barrel. Comparing this with the prices in February 2008, the increase is a whopping 118.34%. As I said earlier, the Pakistani economy cannot sustain this easily and the price hike in Pakistan can be estimated at 170.22% using the same proportion of increase as today. Assuming that the government continues to provide some subsidy as it does today (the minister has already said that no subsidies will be given on petrol next year!), the petrol prices in Pakistan in 2012 will be Rs.145.11 per liter. My guesses are a price higher than this calculation because of the war-like situation in tribal areas and the political situation which is still worsening (there’s more to it!). It will probably be around Rs.160-170 per liter.

Happy cycling in 2012!

CNG to break Rs.50/kg barrier!

// June 30th, 2008 // 5 Comments » // Pakistan

Don’t be surprised tomorrow if the tank of Suzuki Alto fills for an amount greater than Rs. 350. The government has decided to raise the natural gas prices by a whopping 30 percent, while going for a Rs.13 per kg increase in the CNG prices so as not to affect the poor of the country. This isn’t a conventional price hike; it’s abnormal. The reasons are preposterous. The international prices have nothing to do with this, because Pakistan produces all of its gas domestically. Can someone please say how will this price hike not affect the poor? Are we talking about the poor who don’t have a car? Even so, those who have a car and a low wage, should they sell their car to come in the category of poor people? I don’t know how this government is defining poor.

While they claim that they have inherited the country in this state, they really cannot blame the previous government on the gas prices. They were very critical (always) whenever there was even a 2 rupee price hike in the previous tenure. This is why they say, never say words you’ll have to regret (even in opposition). But there is no regret, right?

Every time I see such ridiculous acts of the new government, I’m taken back in history, not far but near history. A Prime Minister, who was labeled dummy (not more than the current one), who was an educated and certified economist, who’s blamed for financial crisis by the uneducated thugs (who don’t even know what the GDP is). That Prime Minister, Shaukat Aziz, must be applauded. His government’s cumulative increase in CNG prices never reached 13 rupees, while this government has achieved the spectacular feat in one go. See what difference an educated man, who’s an expert in his field, can make?? Hats off to Shaukat Aziz!

Fueling the Long March

// June 11th, 2008 // 3 Comments » // Politics

The procession for Long March is in full swing. Numerous of people have loaded themselves in cars, buses and wagons to move from various cities including Karachi and Quetta. I’ve mentioned these two especially because of the distance at which they are from Islamabad. I don’t know exactly about Quetta, but I’m pretty sure about the costs involved in driving from Karachi to Quetta under normal circumstances. A car running on CNG will require fuel worth of approximately Rs. 3500 for this journey (one way). In a procession which is usually slow, the cost is likely to be higher. I leave the cost of petrol and diesel to the readers’ imaginations. While Quetta is much further away in terms of distance.

As I heard from the free and fair media sources, I’ve learnt that thousands of vehicles are driving from Sindh and Baluchistan (I know they’re exaggerating). If I assume 1000 cars from Karachi joining the procession, and all of them on CNG the cost comes to Rs. 3,500,000. Oh yes, it’s Rs. 3.5 MILLION. Where the hell is this fuel money flowing from?? And this calculation is based on simplicity just not be interpreted as a anti-lawyer writer.

With the economy dangling, fuel prices soaring and people crying for low wages this is somewhat of an anomaly. There are two valid answers that I can see to this:

1) People are willing to spend thousands to get Iftikhar Chaudhry back in throne.

2) Someone is financing the whole campaign. Naturally, that someone is a big player who has no financial issues.

The first point seems invalid because that does contradict the economic situation in the country. Those who thing it doesn’t, please prove it statistically. So what remains as the undisputed answer to the contentious issue of finances involved is the second point.

To those participating in the Long Drive, have a safe journey!

The Jury Is Out on the First 100 Days of this Government

// May 31st, 2008 // 2 Comments » // Pakistan

On 28th May, many in Pakistan celebrated or condemned the first ten years of Pakistan becoming an overt nuclear power. But the date had another teeny-weeny element of significance: it almost completed 100 days of Pakistani politicking since the elections of 18th Feb.

In scientific disciplines, from physics to statistics, we have concepts like cross-section; in biology and medicine we have a similar tool: tissue slides. The idea is that we do not churn a whole body of data or put every thing under the microscope but use instead a small part of it to reach conclusions that are then extrapolated to the whole. One hundred days is more than one fourth of a year. Could it then constitute a cross-section, a tissue slide on the aspirations and abilities of the Pakistani politicians?

And more importantly, and in more mundane terms, could this be a window onto their understanding of the exercise of political authority?

If it is then the results do not augur well for them and unfortunately for all of us. Looking back at these hundred days: the winners of a long drawn electoral process, have concentrated every atom of their energy, and of the media, and of the people in an endless and increasingly fruitless debate for and against the restoration of the judiciary. In the last few days PPP has now come up with a 62-point constitutional package that can easily consume the rest of the year in similar debate unfortunately without any solution for the current issues in sight.

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Another Shaukat for Finance??

// May 14th, 2008 // No Comments » // Pakistan

It is being speculated that Mr. Shaukat Tareen may serve as the advisor to PM on finance due to the resignation of PML-N ministers from the cabinet. With the budget sword hanging over head, the economy in dire straits and Ishaq Dar keeping it all unchecked, this may be a refreshing news for the business community. However, it’s not confirmed by any means and the investors are keeping their fingers crossed. Mr. Tareen is to meet Mr. Zardari in Islamabad today to discuss the matter further. But the interesting facts about Shaukat Tareen include his striking professional resemblance to Shaukat Aziz other than his name. Some of these are:

• Both belong to the banking fraternity.
• Both were Citibankers.
• Both attended the Institute of Business Administration (IBA).
• Both have the same first names!

It is interesting to note that a lot of politicians have been repeatedly criticizing Shaukat Aziz absurdly for being a man of Citibank (and hence, the West!). He is being criticized for not understanding the problems of common man and favoring the business community. And many more allegations to go with these…

But who is Shaukat Tareen? And what is his professional background? His previous employment history is impressive. He served at important positions at various banks and organizations of repute.

• Chairman, Karachi Stock Exchange (KSE)
• President, Union Bank
• Chairman, Union Bank
• Chief, Union Bank
• Chairman, Pakistan Banks Association
• Head of Habib Bank Ltd.
• Citibank head in Pakistan

He was supposed to join Saudi Pak Bank as its Chief Executive from 15th March 2008, can’t confirm if he did that.

The credentials are undoubtedly strong and those who believed in the old Shaukat will certainly have faith in the new one. While those who had a tough time digesting the old one will undoubtedly maintain a similar tone for the new one (if he is handed the job).

Economy sinking, Ishaq Dar flying

// May 10th, 2008 // No Comments » // Pakistan

The new year began with all economic problems being linked to the faulty policies of Shaukat Aziz. The new finance minister presented statistics to prove that the previous government was manhandling the economic situation and promised a bright future with immediate results. He did manage to complete half his promise, the latter part. The results are definitely immediate!

1) The Pakistani Rupee has suddenly lost its value against dollar which was extremely stable at around 60 Rs. mark before Shaukat Aziz left. I’m sure Mr. Dar can somehow link that to Mr. Aziz’s policies too.

2) Stock Markets taking a downward trend with KSE going below the 14k mark. During Shaukat Aziz’s tenure, any sort of downward market trend was linked to government conspiracy by Mr. Dar, what is it now?

3) Investors taking money out of Pakistan due to unstable political conditions. If democracy brings that, then good bye democracy!

4) Foreign exchange reserves dipping below the $9 billion mark. Is someone taking money out of that too?!!!!

5) Petrol prices being raised twice after taking charge. Well, again, the previous government didn’t raise the price for 18 months after lowering it to around Rs.56/litre. And despite the soaring international prices they continued to give subsidy and finally raised it after 18 months. But here, 2 raises in 2 months is fast. Someone used to say really lash out at Mr. Aziz in the earlier days.

6) Wheat crisis prolonged! Assume or believe that this was due to Mr. Aziz’s policies. But what has the new government done to control it?? Nothing very practical.

All this and that, the dear minister also skipped the ECC meeting to solve the issue of judges, in London! That meeting isn’t privately financed either. Government funds being nicely spent on flying people abroad to discuss national issues isn’t catching the attention of our FREE AND FAIR MEDIA (Surprising).

While all these immediate results have proved the worth of Mr. Dar, coupled with his previous tenure of economic mismanagement, it is imperative that an immediate change of person follows in this ministry to pacify the fears of investors and the business community.

The fact that the economy is crumbling after the tenure of Mr. Aziz (or Dr. Salman Shah) and AFTER Mr. Dar being sworn in as the finance minister is enough to predict the future. Talking of future, it is highly unlikely that PML-N continues to keep the ministries. Probably, this fact was long known hence the gross negligence.