Petrol price breaks records after Rs137 jump, HSD rises 55% to Rs520 per liter, oil tax hits record
As the city runs on gasoline, motorcyclists line up outside a petrol pump in Karachi, waiting for their turn amid soaring fuel prices. Photo: Jalal Qureshi / Express
ISLAMABAD:
The government on Thursday further increased the price of petrol by Rs 137 per liter, or 43 per cent, to the highest ever level of Rs 458.4 after the Prime Minister decided to impose more taxes on consumers.
The new petrol price of Rs 458.4 per liter is also much higher than the increase in the international market as the Prime Minister has decided to increase the petroleum tax to a record high of Rs 160.61 per liter of petrol.
With the stroke of a pen, the Prime Minister increased the petroleum tax on petrol from Rs 106 to Rs 161 per litre, an increase of Rs 55 in taxes.
The PML-N-led government also increased the price of high-speed diesel to Pakistan’s highest level of Rs 520.35 per liter, an increase of Rs 185 per liter or 55 per cent. But the Prime Minister abolished the oil tax on high-speed diesel and decided to retain a carbon tax of Rs 2.5 per liter in addition to all import taxes.
The government raised prices after failing to convince the International Monetary Fund (IMF) to allow it to provide more subsidies. The IMF has capped maximum fuel subsidies at Rs152 billion.
The failure to convince the IMF also highlights that Prime Minister Shehbaz remained unable to leverage his relationship with US President Donald Trump to convince the IMF to allow the country to absorb the price shock.
It is also the failure of Finance Minister Muhammad Aurangzeb and his ministry, who failed to convince the IMF and failed to achieve fiscal targets. Failure to meet fiscal targets has consumed the additional fiscal space available in the budget.
However, the government’s most shocking action was to increase the levy rate on petroleum to Rs 161 per liter of petrol to raise additional funds to subsidize diesel prices. The government has entrusted gasoline consumers with the essential function of the state, which is to protect its citizens.
This is the second major increase in fuel prices in less than a month after PM Shehbaz hiked diesel and petrol prices by Rs 55 per liter, or 20 per cent. The cumulative increase in the price of gasoline over one month amounts to 63% and that of fast diesel to 75%.
Oil Minister Ali Pervaiz Malik and Aurangzeb announced the new tariffs in a pre-recorded video statement. The Prime Minister could not face the people and unlike the last two occasions when he addressed the nation to tell them that he was not increasing prices, this time he sent the two federal ministers to convey the message.
The Oil Minister said that over the past week, gasoline prices increased by another 6.5 percent to $136.4, and high-speed diesel prices increased by 20 percent to $285 in the international market. He announced the prices a day before the regular increase to avoid piling up and running to gas stations.
The Express PK Press Club reported on Thursday that the government had assured the IMF that it was ready to increase fuel prices. It was one of the poorest negotiated agreements at the level of services, in which the government pretended to the IMF that everything was normal for the economy despite the worst oil crisis since 1973.
Political and bureaucratic failures will now hurt every household at a time when poverty in Pakistan is at an 11-year high, income inequality at a 27-year high, and unemployment at a 21-year high.
Regional tensions have sharply intensified after the American and Israeli attacks on Iran, which left thousands dead. Iran, in retaliation, closed the Strait of Hormuz.
The price of kerosene was increased by Rs 34 per liter to Rs 468, while the price of light diesel was increased by Rs 30 to Rs 395 per litre.
Global oil prices have risen massively amid the closure of some major oil and gas fields due to Iran’s decision to harm US interests in the region and close the Strait of Hormuz.
In June last year, the IMF had asked Pakistan to set aside around Rs 390 billion for its emergency needs. The money was set aside for unforeseen events such as war and natural disasters, which the government did not use and instead placed a greater burden on high-speed gasoline and diesel users.
The government has effectively provided a subsidy of 129 billion rupees in the last three weeks by deducting employees’ salaries and slashing the public sector development programme.
The cost of the war will be paid by ordinary consumers, since government officials and bureaucrats will benefit from free transportation. Despite so-called austerity measures, the federal government recently purchased new cars for its senior civil servants.
The Prime Minister had announced austerity measures, but his ministers did not change their travel habits. Ministers’ vehicles are always escorted by additional security vehicles, even in the Red Zone, supposedly the most protected area in Pakistan.
These ministers go to the Prime Minister’s House from their offices with their entire escort.
The Federal Revenue Bureau administration also uses heavy trucks, in violation of transport policy, and the Punjab government recently changed its policy for its top provincial bureaucrats.
