Photo courtesy PID
Minister of State for Petroleum Musadik Malik on Friday admitted that an increase to the electricity tariff will be imposed after fuel price adjustment by withdrawing subsidies in accordance with the government’s agreement with the International Monetary Fund (IMF).
Addressing a press conference in Islamabad, he said that the government’s primary focus was ensuring that the impoverished were not overburdened by the withdrawal of subsidies necessary for economic stability. However, he stressed, Pakistan was committed to ending “blanket” subsidies that are equally applicable to both the rich and the poor.
Praising Finance Minister Miftah Ismail’s discussions with the IMF, he said an issue was the large number of families—four in six—who earned between Rs. 25,000-30,000 per month and had to be protected from the fallout of the withdrawal of subsidies. He claimed that the coalition government had now started work to finalize the revival of the suspended IMF program, adding that this would allow the country to proceed toward stability. He said the government’s decision to reduce the fuel subsidy had already revived market confidence, with the stock market recovering and the rupee recovering its value against the U.S. dollar.
Referring to ousted prime minister Imran Khan, Malik said he had announced an unfunded subsidy for fuel products and electricity to lay a “trap” for the incumbent leadership. He said there were no records that suggested this decision had been approved by the Economic Coordination Committee, the cabinet, or with written orders of the prime minister or the ministry of finance. The subsidy on fuel, he said, had cost the national exchequer Rs. 360 billion from March till now. If taxes were included, he said, this financial impact came to Rs. 700-800 billion in losses. “This is higher than the Rs. 520 billion allocated for the annual operation of the civil administration,” he said.
The minister also clarified that there was no evidence of Russia agreeing to sell cheaper oil to Pakistan, as claimed by Khan and former minister Hammad Azhar. Rather, he said, the PTI-led government had merely written a letter to Russia expressing a desire to procure oil, which had not received any response. He said the incumbent government had also contacted Moscow, but Russia’s energy minister had said they were only willing to talks on projects related to infrastructure development. “The Russian ambassador was also contacted but we have not received any reply yet,” he added.
Malik regretted that the PTI was spreading disinformation about the reasons for India reducing its oil prices. Rather than linking it to cheaper fuel from Russia, he said, Delhi had reduced prices by decreasing its central excise duty. “In Pakistan, the tax [on fuel] is already zero,” he said, adding that even after the price hike, Pakistan’s petrol price was Rs. 180/liter against India’s Rs. 250/liter. Similarly, he said, the price of diesel in India was now Rs. 234/liter, compared to Rs. 174/liter in Pakistan.