Action demanded amid rising prices and cartel control
Staff Report
ISLAMABAD: The federal government has commendably taken decisive notice of systematic overcharging by cooking oil and ghee industry, with consumers paying an excessive Rs 150 to Rs 175 per kilogram, despite international prices plummeting by 25% since December 2024. This government intervention represents a crucial step in protecting household budgets, which are already strained by persistent inflation.
The Economic Coordination Committee (ECC) has expressed grave concern over the industry’s failure to pass on reduced international prices to consumers. Officials are now preparing formal investigations into price manipulation, a clear sign of the government’s resolve to challenge monopolistic practices. This intervention offers hope for a fairer market that benefits consumers.
Shahid Rasheed Butt, a veteran business leader and former president of ICCI, stated that the Competition Commission of Pakistan (CCP) will initiate an investigation into collusive behavior within the vanaspati manufacturing sector. This development mirrors the government’s earlier confrontation with sugar mafia, suggesting a broader strategy to dismantle price-fixing mechanisms, he added.
Shahid Rasheed Butt stated that data from the Pakistan Bureau of Statistics (PBS) and other sources reveal a stark disparity between international and domestic pricing trends. While international palm oil prices declined 25% since early December 2024, local cooking oil prices remain 4.5% higher than their previous peaks. This corrupt practice has imposed an estimated Rs50 billion additional burden on households over the past six months.
The business community leaders have welcomed the government’s intervention while demanding swift accountability. The Pakistan Vanaspati Manufacturers Association (PVMA), representing 148 registered members with 450 licensed brands, has maintained that market competition prevents price manipulation. However, industry observers note that despite intense competition claims, the impact of international price decreases has not been passed on to consumers.
The market dynamics of this sector reveal concerning concentration patterns. Pakistan imports 89% of its edible oil requirements, totalling 3.842 million metric tons, with 88% sourced from Indonesia and 11% from Malaysia. This import dependency creates opportunities for coordinated pricing strategies that the CCP must thoroughly examine and address.
He said that the FBR import data indicates sufficient stock availability, with 375,000 metric tons of palm oil and palm olein available at ports. These inventory levels contradict industry claims of supply constraints; often used to justify elevated prices.
Consumer rights organizations have expressed concern over the systematic exploitation of middle and lower-income households.
Previous CCP actions against the PVMA resulted in Rs50 million penalties. Another decisive CCP action could trigger industry-wide price corrections, potentially saving consumers billions in expenses while establishing deterrent effects against cartelization attempts by corrupt businessmen.
