New Year gift: petrol, diesel become dearer

ISLAMABAD: The government on Sunday announced an increase in petroleum prices with effect from today (Monday), January 1, 2018 on the eve of New Year.

Talking to reporters, Adviser to PM on Finance Miftah Ismail said that petrol price has been raised by Rs4.06 per litre and now its new price stands at Rs81.53 per litre in the market. The diesel price has been jacked up by Rs3.96 per litre and its new price would be standing at Rs89.91 per litre and kerosene oil price went up by Rs3.79 per litre and its new price would go up to Rs64.32 per litre. The price of light diesel has been increased by Rs6.25 per litre and the new price will be Rs58.37 per litre.

Miftah Ismail said the government has decided to pass on almost 50 percent increase compared to the Oil and Gas Regulatory Authority (OGRA) recommendation, while the remaining 50 percent were absorbed by the government. He said the prices of petroleum products in Pakistan were less than Turkey, Sri Lanka, Bangladesh and India. He said the government slashed down the GST rate on diesel from30.6 percent to 25.5 percent while the GST rate on light diesel was increased by 6 percent.

Miftah offered comparison of the rates of previous four years with these countries and interestingly throughout these years, tariff in Pakistan has been the lowest. Especially, the rates of petrol were lowest in the said countries. Turkey’s tariff is double than what is prevalent in Pakistan.

The adviser reminded that the price hike in the international market is forcing the government to enhance the rates. “Prime Minister Shahid Khaqan Abbasi has asked the ministry concerned not to transfer the burden of the whole increase to consumers. He discarded the recommendations of Ogra and advised that a major chunk of the raise should be borne by the government,” Miftah said.

"Petrol price in Turkey is at $1.48, in India $1.14, in Bangladesh $1.08 and in Sri Lanka $0.83 per litre while in Pakistan its price is 0.7 per litre,” he added. The adviser said the government did not intend to launch tax amnesty scheme as it was already implementing amnesty by allowing everyone to bring dollars in the country. He said that in order to discourage hawala/hundi, certain questions were asked on certain upper limit, otherwise there was no problem.

Miftah said the government has no plans to launch any bond in the remaining period of the current fiscal year. However, he did not explain how the government would meet the yawning financing gap in the current fiscal. To a query, he said the government would not abolish the pension scheme and no such plan is even under consideration at the moment.

The adviser said that currently the country’s foreign exchange reserves are more than $20 billion. He said exports are increasing and people should have faith in the steps for strengthening the economy of the country. He said Pakistan wouldn’t opt for the IMF programme.

Finance Secretary Shahid Mehmood, who was also present on the occasion, brushed aside an impression that the government is planning to bring about new salary structure in the manner that the pension system will be abolished subsequently. “No such proposal is under consideration,” he clarified emphatically and ruled out kite-flying in this regard.