The federal government on Thursday increased the prices of petroleum products by Rs30 per litre across all categories, Federal Finance Minister Miftah Ismail announced.
This is the highest, single increase in fuel prices in the country’s history.
Addressing a press conference in Islamabad on Thursday evening, the minister said that the federal government is currently offering heavy subsidies on petrol and diesel. He added that in the recently concluded talks with the global lender, the International Monetary Fund (IMF) had refused to release the next tranche of a $6 billion loan until subsidies on fuel are withdrawn.
He said after the latest increase in prices, petrol would cost Rs179.86 and diesel Rs174.15 per litre. Light diesel oil will cost Rs148.31.
In the last 15 days, the finance minister said, the government had incurred losses worth Rs55 billion on account of providing subsidies on fuel.
The government, he said, was currently paying as much as Rs56 in subsidy on every litre of diesel consumed, he said. He added that the rich and the poor were equally benefiting from the subsidy.
He added that before their ouster on April 9, the former PTI government laid landmines across the economic landscape for any incoming administration.
Dismissing the possibility of early elections, Miftah Ismail said that a caretaker government is not expected to take over until August 2023, and that until then, Shehbaz Sharif will continue to serve as the prime minister.
He said the withdrawal of subsidies was an essential step to protect the country, even if it cost the government politically.
A subsequent notification from the Finance Division confirmed the price increases.
It explained, “Maintaining the existing petroleum products’ prices at the exi(s)ting subsidized rates is constantly increasing the twin deficit for the government besides posing huge risks for energy supply chain.”
The notice read that the situation was so dire that oil marketing companies (OMC) and refineries were not getting confirmation from international banks for letters of credit while local banks were also reluctant in opening new LCs.
To rationalize the petroleum products prices, the government has decided to revise the existing petroluem products prices, the notice read.
The IMF, in a statement issued at the end of technical level talks in Doha on Wednesday, urged the government to implement measures Pakistan agreed to in February when the last loan tranche $1 billion was released.
Immediately after his announcement long queues were seen at filling stations in Karachi and other cities.
Imran Khan had announced a reduction in petroleum prices at the end of February, about a week before a no-confidence motion was submitted against him in the National Assembly.
The Shehbaz Sharif-led government, which took over on April 11, found it hard to reverse the move fearing political backlash from the people.
However, depleting foreign exchange reserves have increased pressure on the Pakistani rupee, which continues to lose value against the US dollar.
Imran slams govt for historic price hike
Criticizing the government’s move, former Prime Minister Imran Khan said the nation will now have to pay the price of “imported government’s subservience” by paying Rs30 more per litre for petrol.
“The highest single price hike in our history,” he added, saying that the incumbent government has not pursued the PTI-led government’s deal with Russia for 30% cheaper oil.
“In contrast India, strategically of US, has managed to reduce fuel prices by Rs25 per litre by buying cheaper oil from Russia,” he said. “Now our nation will suffer another massive dose of inflation at the hands of this cabal of crooks.”
Long queues at filling stations
Following the announcement for increase in fuel prices, petrol pumps across the country witnessed a sudden rush of customers hoping to get fuel while it was still relatively cheaper.
SAMAA TV’s Salman Ahmed reported citizens hounded the petrol stations with their vehicles as well as extra bottles to stock the commodity fearing the shortage.
Taking to Twitter, social media users also reported the long ques outside petrol pumps across the city. “Rs30”, #PetrolDieselPrice, and Miftah were among a few words which quickly top the Twitter trends in Pakistan as government revealed the new prices.
In what could be an early signs of a schism between leaders of the ruling Pakistan Muslim League-Nawaz (PML-N), former finance minister Ishaq Dar suggested that he held a different view on raising fuel prices.
While speaking on a local news channel, Dar was asked about the increase in prices. The former finance czar said that the gap between actual prices of petroleum products and subsidized prices was Rs39 for petrol and around Rs80 for diesel.
In the party, every member has the right to share their view on issues and I will share my view, and I do not think raising prices is an advisable step, he said, adding that if any increases have been announced, they would have been announced after following the due process of securing relevant approvals.
He added that per Miftah’s past statements that the previous government had promised the IMF to remove all subsidies and that the incumbent government was only fulfilling those commitments and is not responsible for them. He added that the terms of the commitment should be shared with the public.