Govt again jacks up oil prices

ISLAMABAD - The coalition government on Wednesday once again increased the prices of petroleum products up to Rs59.16 per liter to completely withdraw the subsidy to fulfil one of the conditions of the International Monetary Fund (IMF) for the revival of loan programme.

Addressing a press conference along with Musadik Malik, Minister of State for Petroleum Division, here, Finance Minister Miftah Ismail said that the government has decided to completely withdraw the subsidy on oil products by increasing the prices. According to details, the government has increased the petrol price by Rs24.03 per liter to Rs233.89 per liter and High Speed Diesel by Rs59.16 per liter to Rs263.31 per liter. Meanwhile, the government has also enhanced kerosene oil price by Rs29.49 per liter to Rs211.43 per liter and Light Diesel Oil by Rs29.16 to Rs207.47 per liter. The new prices would be effective immediately.

“In the wake of rising petroleum products prices in the international market and exchange rate variation, maintaining the fuel prices at the subsidized rate is constantly increasing the fiscal deficit and current account gap besides putting pressure on country’s foreign exchange reserves. Therefore, the government has decided to consider the proposal of OGRA to increase the petroleum products prices. However, the Petroleum Levy and Sales Tax have been kept at zero to provide relief to the end consumers,” the ministry of finance said.

The Finance Minister admitted that inflation would increase following the decision to enhance prices but he also stated that government has no other option as prices are increasing in international market. The country could have gone to default if the government does not take tough decisions, he explained.

In a press conference along with Musadik Malik, Minister of State for Petroleum Division, Miftah Ismail said that oil prices in international market has surged to $120 per barrel, which was around $85 to $90 per barrel in February when previous government kept oil prices unchanged till June 2022. He said that previous government has violated the agreement with the IMF, which created problems for the incumbent government. The PTI led government had agreed with the IMF to fully pass on oil prices, imposing Rs30 per liter Petroleum Levy and Rs17 percent General Sales Tax on all petroleum products prices, he added.

“Imran Khan had deliberately reduced the prices of petrol by giving subsidies in February this year,” Miftah said, adding that the incumbent government was bearing the brunt of those decisions. Finance Minister said that government could not provide monthly subsidy of Rs120 per month oil prices, which is three times higher than expenditures of civil governments. He expressed hope that situation would improve soon as the country would receive inflows from multilateral sources.

New High Speed Diesel price stands at Rs263.31, petrol price at Rs233.89, kerosene at Rs211.43, Light Diesel Oil at Rs207.47 per liter

The Finance Minister said poor people would get relief under the Prime Minister’s ‘cheap diesel and cheap petrol programme’ to compensate weaker segments of the society from the hike in prices of petroleum products. Under the programme, the government will provide targeted subsidies of Rs2000 per month to 14 million families, who are living below the poverty line.

The government has increased the petroleum products prices thrice since May 27. Since then, petrol price has increased by Rs84.03 per liter and High Speed Diesel by Rs119.16 per liter.

Speaking on the occasion, Musadik Malik said that the oil prices have increased in the international market. He admitted that it was a tough decision. The government is ready to take further tough decision to bring the country out of the current crisis. He said that losses in power and gas sectors have massively increased in last one year. Amount of oil subsidy, Rs1200 billion per year was much higher than defence, development and other budgets.

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