Industry hails PM’s decision to slash petroleum, power rates

KARACHI: Representatives of industry and analysts on Monday hailed the prime minister’s economic relief measures which would bring down the prices of petroleum products and electricity for the masses.

However, they questioned the financing for these relief measures in the face of the tight fiscal position of the country, which relied heavily on foreign and domestic borrowing to bridge the budget deficit.

Renowned economist Dr Ashfaq Hassan Khan, however said the government has devised a well-designed plan and there would not be any issue related to financing of these relief measures.

Prime Minister Imran Khan in his address to the nation announced to reduce the price of diesel and petrol by Rs10/litre, saying that the price would remain the same till the next budget, which would be presented in June. Likewise, he announced to cut electricity tariff by Rs5/unit, which would remain implemented till the next budget.

The reduction in oil prices came at a time when global crude prices soared to $100 billion/barrel mark, and the country was expecting further increase in prices in the fortnightly revision on Monday.

Asif Inam, chairman, All Pakistan Textile Mills Association (APTMA) South Zone, commended the PM’s relief package and believed it would mitigate the current financial miseries of the people.

Hailing the reduction in power tariff, he said, “It can be brought down further if the government renegotiates the terms of the conditions with IPPs (independent power producers), which have pocketed billions of rupees by terms and conditions in the previous regimes.”

Analyst Khurram Schehzad said that the big question for the government was how to finance these relief measures, when the fiscal condition of the country was not so rosy. “The subsidy of today is inflation of tomorrow,” he said, and urged the government to go for more structural reforms and long-term planning instead of short-term measures in the form of subsidy. If the government had some financial cushion on the back of growth in tax collection, it should have been invested in long-term mega projects for industrialisation and job creation, rather than “dole-outs in the form of subsidies”, he added.

Economist Dr Ashfaq Hassan Khan disclosed that he was part of the exercise that worked out the relief package announced by the PM and revealed that the government had managed to explore avenues to provide the subsidy to bring down petrol, diesel and power prices.

He pointed out that the country has collected more than Rs260 billion more taxes so far in this current fiscal, which would be utilised to provide the relief to the masses. Relief would also be provided from the government’s social security programmes. About the revenue collection target in the form of petroleum development levy under the conditions of International Monetary Fund (IMF), Dr Ashfaq said that if prices were not increased, it meant they would remain frozen, and the government would provide relief to the masses till the next budget.