Fuel prices raised again to unlock IMF funding

ISLAMABAD:

The federal government on Wednesday announced a massive increase in prices of all petroleum products – especially petrol by Rs24 per litre and high-speed diesel (HSD) by Rs59.16 per litre — the third such raise within the last 20 days.

The new prices would come into effect from midnight tonight, Finance Minister Miftah Ismail said while addressing a news conference in Islamabad. He was flanked by State Minister for Petroleum Musadik Malik.

The finance minister blamed the previous PTI government for making a faulty agreement with the International Monetary Fund (IMF) that had tied the hands of the incumbent and forced it to increase oil prices to put the economy on right track.

He said that the government had a big challenge to rescue country. “If we don’t increase oil prices, the country could face a default.”

He added that it was a difficult decision though to increase the prices of petroleum products. However, he added that government would protect the poor.

After the increase, petrol will be available at Rs233.89 per litre after a hike of Rs24.03, HSD at Rs263.31 per litre following a rise of Rs59.16 per litre, kerosene oil at Rs211.47 per litre after a surge of Rs29.49 and light diesel oil at Rs207.47 per litre after an increase of Rs29.16.

Read more: Pakistan to default if subsidies not abolished till July: Miftah

The government has raised the price of petrol by more than Rs84 per litre in the last 20 days.

The minister said the international price of petrol was $120 per litre as he tried to justify the hike.

“The government had no choice but to pass on the impact of international prices to consumers in Pakistan,” he added.

“I have been seeing the country's situation for 30 years, but I've never seen such a situation in terms of inflation.”

Ismail claimed that the government was tied by pacts made by the PTI government with the International Monetary Fund (IMF).

He admitted that the middle class would suffer from the petrol price hike.

However, he added that the government would take steps to limit the impact on the most vulnerable.

"We have taken difficult decisions before and we will take in the future as well to protect the country from financial difficulties.”

The minister said the government would not bear a loss in the sale of petrol anymore as the fresh hike had brought the fuel price at par with its international rates.

Speaking on the occasion, Minister of State for Petroleum Musadiq Malik maintained that the government had considered in detail before announcing the latest increase.

"This decision is taken because we import nine million tonnes of oil every year, and 8.8m tonnes of diesel and if we did not increase the price, the government would have had to bear a loss of over Rs100 billion monthly."

Also read: IMF hands list of demands for loan revival

 

The state minister added that the government accepted the responsibility for its measures and would determine a new way forward for the country through difficult decisions.

To a query, Miftah said Pakistan could not control the Ukraine-Russia war and its impact on international fuel prices.

"We will only be able to control fuel prices when our difficult period ends and the country's relations with global financial institutions improve.”

Earlier this month, the federal government had decided to raise the prices of all petroleum products with the exception of one by another Rs30, just a week after making a similar increase.

Back then, Miftah had said the government was still facing a loss of around Rs9 in petrol despite a hike of Rs30 as it was “not collecting any tax” on the fuel.

The minister had added that the government was holding talks with the IMF every day. “We cannot accept all their demands but there are certain points that we have to agree to."

(With input from agencies)