Home Latest News Government Unveils Second Fuel Price Hike in One Week

Government Unveils Second Fuel Price Hike in One Week

Petrol prices hit Rs. 209.86/liter, with diesel now retailing for Rs. 204.15/liter and kerosene for Rs. 181.94/liter

by Staff Report

Amer Hilabi—AFP

Finance Minister Miftah Ismail on Thursday night announced another increase to consumer prices of petroleum products—just a week after the government had raised tariffs by reducing subsidies that had been announced by the previous regime.

Addressing a press conference, the minister said Prime Minister Shehbaz Sharif had approved another Rs. 30 hike for petrol prices, further reducing the subsidy being granted on fuel. According to a notification issued by the Petroleum Division, the prices of petrol have been raised from Rs. 179.86 to Rs. 209.86/liter; high-speed diesel from Rs. 174.15 to Rs. 204.15/liter; kerosene from Rs. 155.56/liter to Rs. 181.94; and light diesel oil from Rs. 148.31 to 178.31/liter.

According to Ismail, kerosene is now the only fuel commodity that is entirely free of subsidies. “We are still facing losses of Rs. 8 on light diesel; Rs. 9 on petrol; and Rs. 23 on high-speed diesel,” he said, admitting that the “price shock” of the new rates would disproportionately impact the most impoverished segments of society. However, he stressed, the government had no choice but to pass on the burden of international prices to ensure economic stability.

To a question on whether this price hike would enable the government to revive a suspended program with the International Monetary Fund (IMF), he said he hoped to finalize an agreement within this month, but acknowledged that the government still needed to implement some reforms. “The IMF wants to see our budget, so the reforms that we want to introduce will be introduced before [it]. However, we are speaking to the IMF on a daily basis,” he said.

The finance minister said the price hike was unfortunate but “inevitable,” as the agreement signed between the Pakistan Tehreek-e-Insaf (PTI)-led government and the IMF had “tied the [incumbent] government’s hands.” To a question, he reiterated that the previous government had not made any “deal” to import cheaper oil from Russia, adding that former energy minister Hammad Azhar had written a letter to Russian authorities about Pakistan’s willingness to import oil but there had been no response to it from Moscow.

According to Ismail, Russian authorities had told Pakistan that the country did not complete the 2015 gas agreement so it was leery of signing a new deal with it. “I cannot force the seller,” he said, adding that “we are not crazy that we” would not buy cheaper oil if there was no threat of sanctions on Pakistan for doing so.

The minister also confirmed that Chinese banks had agreed to refinance Pakistan with $2.3 billion to shore up Pakistan’s foreign exchange reserves. He said the inflow was expected “shortly” after some routine approvals from both sides.

To a question, Ismail said the government would attempt to ease the impact on inflation on the impoverished by introducing targeted subsidies for essential commodities, including keeping the price of sugar fixed at Rs. 70/kg and wheat at Rs. 40/kg at Utility Stores. He said the government was giving subsides of Rs. 100 on cooking oil and Rs. 15 on rice and pulses at Utility Stores already, adding these would continue “for some time.”

Saving money

During his press conference, Ismail reiterated his criticism of the Imran Khan-led government, saying it had laid “landmines” for the incumbent rulers through its flawed policies. “I did not have any option but to increase fuel prices. Even Imran Khan [would have increased prices]. But now he is making irresponsible statements that the country will default; an ex-prime minister should not be issuing such remarks,” he said.

To a question on why the government was reducing its own expenditures to shore up reserves, the minister claimed it would not have a major effect on the national exchequer, as the total monthly operating cost for Islamabad was Rs. 40 billion, while subsidy on fuel cost over Rs. 100 billion. He said that even if he reduced the federal government’s expenditure by 10 percent, the country would only be able to save Rs. 4 billion monthly. By contrast, he said, the previous subsidy on petrol had cost the government Rs. 4 billion per day. At new rates, he said, the subsidy on petroleum products would be reduced to about Rs. 25 billion per month.

PTI protest

Reacting to the government’s decision to withdraw subsidies, ousted prime minister Imran Khan urged the public to protest against it today (Friday). “Imported government has increased petroleum prices by 40% or Rs. 60 per liter. This will increase burden on the public by Rs. 900 billion and price hike in basic necessities. Plus, the Rs. 8 increase in electricity price will put entire country into shock. Expect inflation by 30% highest in 75 yrs,” he wrote on Twitter. “Our government sustained pressure of COVID and gave Rs. 1,200 billion worth economic package. This year alone we reduced sales tax to zero percent and additionally provided Rs. 466 billion energy subsidies to protect our public. For us, our priority has always been our people,” he added.

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