06/01/2012 (Business Recorder) - The 48 hours supply suspension of imported edible oil by transporters with nothing to do with the ongoing gas crisis is a bolt from the blue.

For a change, the act of private transporters is not tagged to the current unending CNG dilemma.

It has been more than two days since the All Pakistan Oil Tankers Association has cut the imported edible oil supply from Karachi terminal to vegetable oil/ghee mills all around the country.

This has had a tremendous impact on edible oil supply, which was otherwise being replenished by both the private transporters and National Logistics Cell (NLC).

Transporters are demanding a ban on NLC supply of edible oil in protest against the cancellation of oil and ghee supplying contracts across the country.

The 94 edible oil starved mills in Balochistan, Punjab and Khyber-Pakhtunkhwa now lay at the mercy of National Logistics Cell (NCL), which has already translated into massive supply slippage.

The ramification for local ghee and manufacturing units and end consumers is no rocket science.

The industry eyes a serious shortage that, if continues, will result in a price hike.

According to industry sources, the cost of production would jump by more than 40 percent touching record high levels, whether raw edible oil is curtailed by the transporters or NCL is given complete control over the imported edible oil supply.

Such curtailment with shortage in the domestic market for a country where annual consumption lies above 2 million tons and exceeds annual Indian usage per person is a reasonable yet unwelcoming indicator for a price surge.

The trickle down affect of prices would be fast, without doubt, as Pakistan is one of the largest consumers of palm oil.

CPI has already swelled up by 10.87 percent during 1HFY12 over the same period in FY11.

Of the major items that showed an increase in their prices during July-December 2011, ghee rose by 25 percent and cooking oil rose by 24 percent.

Although artificially created, such supply shocks render edible oil follow the same pattern as any other energy resource in the country, especially natural gas: widening demand and supply gap.

Whether the 2,500 oil tankers and 25 years of service dedicated to the edible oil segment succeeds in ruling out NLC or not, domestic market should gear up to pay for the extra profits earned during the process.