29/02/2008 (The Nation, Pakistan), Lahore - The new govt will be compelled to withdraw subsidy on oil prices gradually following a record prices surge in international market, avoiding fiscal budget deficit besides the strong pressure of the world bank, sources confided to The Nation here on Thursday.

The sources in the Finance Ministry said that the govt would gradually withdraw the oil subsidy most probably from June 2008 and the new govt would have to withdraw this subsidy gradually as the oil prices in the international market reached its highest level with 102 US dollars per barrel.

According to the sources, the govt is giving Rs 17 per-litre subsidy on the prices of diesel at present and this subsidy is being withdrawn on the pressure of World Bank.

The sources in the Finance Ministry revealed that the new govt would have to withdraw this subsidy within 18th months to fill the gap between the local and international oil prices.

Following the record surge in the oil prices in international market subsequently, the prices would shoot up in Pakistan, economic experts said, adding, it will lead to inflation in the country.

Initially, the sources said that the govt would withdraw Rs 3 per-litre subsidy on the oil prices. The increase in the prices of oil will lead to inflation, as the cost of production will also increase accordingly.

It may be mentioned here that despite a record surge of oil prices in the international market during the last couple of months, the oil prices in Pakistan remained unchanged.

Substandard edible oil import to surge

29/02/2008 (The Nation, Pakistan),LAHORE - The volume of import of RBD palm stearin is expected to swell up to 20 per cent with the increase in international oil prices, it is learnt here on Thursday.

The sources said that the vanaspati ghee manufacturers mix RBD palm stearin in their product, which primarily is meant for soap manufacturing.

‘Most of the ghee manufacturers are producing substandard products as they hardly care about hard and soft oil ratio’, the sources said warning that these products were health destructive.

According to Pakistan Standards Institute (PSI) formula, a blend of 65/35 hard and soft oil ratio is a necessary for producing standard ghee and edible oils, but sources said that most of the unregistered ghee manufacturers and cooking oil producers were using 100 per cent hard oil which is cheaper as compared to soft oil.

They said that the melting point of RBD palm oil stearin should be 37 degrees centigrade which is the requirement of human body, but its melting point was near 44/45¦ C and even in some case 50 degree C which is injurious to health.

Officials and private sector stakeholders suggests that the National Standards and Quality Control Authority had allowed the soap manufacturers to use blue colour bleachable stearin in the product but the soap manufacturers, most of whom also own ghee factories, clean the stearin a little bit and mix it in ghee.

Oleo Chemicals Industry has also taken up the issue with the Federal govt, saying that the bleachable RBD palm stearin was being imported mainly to use in soap manufacturing rather than for ghee, which is harmful for health.

The sources said that Oleo Chemicals Industry, which sells refined palm oil to ghee/oil manufacturers, was of the opinion that the colour of stearin should be non-bleachable so that it could not be used in the ghee making.

But soap manufacturers were against the black or white colour of stearin because it could not be used in ghee.

The sources said that high quality ghee manufacturers were also opposing the import of stearin saying that when ghee was available at cheaper rates in the market, people would buy it without knowing that it was harmful for their health.

The sources said that the blue stearin was being used in ghee making as the National Standards and Quality Control Authority was apparently not in a position to suggest any step against this fatal chemical.

‘We believe there will be an increase in import orders as we are expecting lesser yield of cotton seed this year, which is a major source of edible oil production’, sources said ,adding, that extraction of oil from 100 kg of cotton seed was around 40 kg.

Pakistan imports about 1.4 million tonnes of edible oil products yearly, mostly Malaysian palm oil and olein, to meet domestic demand of 1.95 million tonnes as locally produced cotton seed meets the rest of the demand.

Edible oil imports cost around $ 700 million every year.

‘Similarly, local hybrid seed of canola costs Rs 150 per kg compared to Rs 400 per kg to Rs 480 per kg’, they added. Local mustard crop is being cultivated on about 700,000 acres annually replacement of which would enhance canola acreage to about 1 million acres producing about 200,000 tonnes canola oil worth Rs 7.5 billion per annum, they said.

‘Blending ratio of 35:65 for soft and hard oil has been introduced for improving quality of ghee and generating demand for soft oil’, said an importer.