Prices of petroleum products up by Rs30/litre

ISLAMABAD: Finance Minister Miftah Ismail Thursday announced a massive hike in the price of petroleum products [petrol, oil, lubricants or POL] after the International Monetary Fund (IMF) emphasised abolishing the subsidies on the essential commodities.

In a press conference, the finance minister said the government decided to hike the price of petrol, diesel, kerosene oil, and light diesel by Rs30, effectively from May 27. New prices (per litre): Petrol, Rs179.86; Diesel, Rs174.15; Kerosene oil, Rs155.56; Light diesel, Rs148.31.

The finance minister noted some burden was shifted to masses, but despite the massive increase in the price of petroleum products, the government was still bearing losses, but vowed to soon strike a staff-level agreement with the Fund.

Pakistan and the IMF could not reach a staff-level agreement a day earlier to revive the stalled $6 billion programme after the global lender said there were deviations from the policies that were agreed between both sides.

The PTI-led government had originally agreed to the IMF's demand of raising the price of electricity and petroleum products but, later in March, Imran Khan announced subsidies on both commodities — and the current government was continuing with the same arrangement.

The finance minister noted that following the decision to hike the prices, financial markets would witness stability, the rupee would strengthen, and the economy would get a boost.

In response to a question, Miftah said due to an increase in the price of petroleum products, inflation would definitely witness an increase. "But tell me, what option did we have instead of taking this step," he asked.

Miftah said Khan — going against the IMF deal — had announced subsidies on petroleum products when his government's tenure was coming to an end. "We are all the owners of a country. How can we afford [such subsidies] that are costing three times more than running the everyday affairs of the government," the finance minister said.

He said it was an injustice to the lower-income segment of society that the people who own cars, industries, and generators, are getting subsidies. "Indeed, this is the failure of the government that inflation is rising [...] but we have provided subsidies on commodities at utility stores and are making sugar available at a lesser cost than Imran Khan's government," he said.

Miftah said increasing the price of petroleum products by Rs30 was not an easy decision for Prime Minister Shehbaz Sharif, but vowed that the incumbent government would take steps to safeguard the economy.

Quoting the defence minister, Ismail said: "Khwaja Asif Sahib, in today's talks, noted that it would not be a wise decision to harm the state and save our politics." The finance minister stressed that the present government would present the fiscal budget for FY2022-2023 and ruled out formation of a caretaker government, noting that the current setup would complete its tenure.

Pakistan and the IMF held talks in Doha after holding one- week negotiations but failed to strike staff level agreement because the government was reluctant to withdraw unfunded fuel and energy subsidies. The IMF has asked the government to move “urgently” and after return from Doha the Finance Minister Miftah Ismail took approval of the premier and announced increase in POL prices.

Slamming the Shehbaz Sharif-led government for the hike in petrol prices, PTI Chairman Imran Khan said that nation would “suffer another massive dose of inflation at the hands of this cabal of crooks”.

“Nation starting to pay price for imported government’s subservience before foreign masters with 20 per cent/Rs30 per litre hike in petrol and diesel prices — the highest single price hike in our history,” said the PTI chairman.

Calling the incumbent government “incompetent and insensitive”, the former prime minister slammed them for not pursuing the deal the last government had signed with Russia for 30 per cent cheaper oil.

“In contrast India, strategic ally of US, has managed to reduce fuel prices by PKR 25/litre by buying cheaper oil from Russia. Now our nation will suffer another massive dose of inflation at the hands of this cabal of crooks,” said Imran Khan.