ISLAMABAD: The government has decided to keep petroleum prices unchanged for a third consecutive month while crude oil prices touched the $100 per barrel mark in the international market after almost three years. The costly economic decision was made at a time when an International Monetary Fund (IMF) team is in Islamabad and the government was said to be trying to convey its sincerity regarding implementing key tax and power sector reforms prescribed by the Fund.
Observers believe that the decision is likely to complicate the matter of Pakistan’s request for the restoration of a $11.3 billion bailout programme.
A parliamentary committee, formed to review the petroleum prices formula, met here on Monday.
However, it failed to build a consensus on increasing fuel prices, as opposition parties and key ally, the Muttahida Qaumi Movement (MQM), threatened to launch public protests if a hike was announced.
The Oil and Gas Regulatory Authority had proposed to increase petrol price by Rs9.13 per litre and a Rs8.72 per litre increase in high-speed diesel.
An insider said that the opposition parties had “offered” the government to increase the petrol prices by Rs2 per litre and diesel by Rs3 a litre, insisting that they would still publicly oppose the decision but with lesser vehemence.
The spokesman for the Oil and Gas Regulatory Authority (Ogra) said that diesel, petrol, kerosene and high-octane fuel would continue to be sold at their previous prices of Rs78.67, Rs73.19 Rs70.95 and Rs78.67 a litre, respectively.
After failing to evolve a consensus, the petroleum ministry sent a summary to the prime minister for deregulating petroleum prices. The summary also talked about reducing the deemed duty – a levy which the government charges at the rate of 7.5 per cent and hands over to oil marketing companies for reducing sulpher content in crude oil. But the oil marketing companies have linked the reduction in deemed duty with elimination of circular debt.
“When political parties do not agree, what can I do?” said an apparently dejected Petroleum Minister, Syed Naveed Qamar.
In December 2010, the government had notified a substantial increase in petroleum prices, but had to reverse its decision after the PML-N and the MQM threatened to launch massive protests.
Published in The Express Tribune, February 1st, 2011.
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