PM Shehbaz says rejected advice to further raise fuel prices, govt to absorb burden

ISLAMABAD:

Prime Minister Shehbaz Sharif said on Friday night, the eve of Eidul Fitr, that he had rejected advice to further raise fuel prices and the federal government would absorb the burden itself.

Addressing the nation, he felicitated the nation on the occasion of Eid.

"In the context of the current situation, this Eid specifically demands from us humanity, national unity and collective responsibility. I think the real happiness of Eid is fulfilled when we share it with the needy and deserving around us and extend them the hand of kindness."

He said the world was undergoing an "unusual test", adding that continuous effort and empathy would be the guiding beacons that would lead the people out of the current crisis.

"The war in our region has not only shaken the international economy and peace but also badly affected the common man's daily life."

The premier said that attacks on the energy infrastructure of Gulf states had made the situation further dangerous. "The concern is increasing with every passing moment that this crisis could become even more severe and longer," he added.

The prime minister said oil prices in the international markets were sky-high and had increased tremendously in a short span to reach historic levels.

"If the situation keeps deteriorating like this, the possibility of further increase cannot be ruled out."

PM Shehbaz said the prices were affecting the global community, leading to the birth of a "new inflationary storm". The prime minister added that he was aware of the impact a previous Rs55 fuel price increase had on the people, saying that many faced difficulties in fulfilling their household needs.

He thanked the nation for exhibiting patience, steadfastness and understanding of the situation. The premier added that there had been a considerable increase in the fuel price in international markets, against which he was advised to raise prices again, but he had rejected it "because I knew that the previous increase had already become a heavy burden on your ability to bear".

PM Shehbaz said that a further increase in such a situation would have strongly affected the common man's life, adding that he thus decided that the government would absorb the resulting Rs24 billion burden itself.

"We made the necessary cuts in our budget for this and limited development expenditure," he said.

The prime minister said prices had increased considerably once again in the beginning of the current week and he was again advised to raise fuel prices. However, he added that he had decided not to do so under a sense of responsibility and on account of the imminent Eidul Fitr.

PM Shehbaz said the government would again bear the expense of around Rs45b for the past week. "In my view, the greatest priority is ensuring the protection of the most destitute segment and saving it as much as possible from the burden of increasing prices."

He said so far, the government had spent an amount of Rs69b to prevent a Rs127 per litre increase in the petrol price and Rs252 per litre in that of high-speed diesel.

However, he added that it was not a solution that could last for long, saying the government would absorb the burden as much as possible to protect the nation and provide relief to the poor.

The prime minister said while the measures had supported the needy, some well-to-do segments had unduly benefited from it. "To stop this unjust practice, I have directed ministries to devise a fair mechanism which ensures that government relief is limited only to those who are deserving of it," he added.

The government was expected to absorb the impact of an increase in oil prices of up to Rs49 per litre amid a sharp surge driven by tensions in the Gulf region.

According to calculations, the price of high-speed diesel had increased by Rs49 per litre, while diesel prices had risen by Rs29 per litre. However, the government may absorb this impact through price differential claims.

During the last week, the federal government hiked the prices of kerosene oil and light diesel oil (LDO). However, it decided to freeze petrol and high-speed diesel prices by maintaining the petroleum levy and providing a subsidy to absorb rising costs.

Two weeks ago, the government sharply increased diesel and petrol prices by Rs55 per litre or 20% — due to the ongoing US-Israel and Iran war, which has disrupted supply chains and pushed crude oil prices to two years’ highest level.

The increase in petrol prices was more than the surge in the international market, as the government chose to collect more money than required from motorcyclists and car owners to subsidise the use of diesel, mostly by the public transport and the agriculture sector.

However, Prime Minister Shehbaz Sharif decided not to increase the prices of petroleum products last week, honouring his promise to the public despite a further rise in international oil prices.

The Committee to Monitor Petrol Prices was informed on Monday that the country had adequate fuel availability for March and coverage was available until mid-April based on current cargo planning and supply arrangements, with efforts underway to extend it further towards the end of next month.

The committee members undertook a comprehensive review of petroleum product stock positions across the country and were briefed in detail on the current national inventory of crude oil and refined petroleum products, ongoing import arrangements and supply chain logistics.

Earlier, Petroleum Secretary Hamed Yaqoob Sheikh said the country currently had diesel reserves sufficient for 21 days and petrol stocks for 27 days.

The petroleum secretary briefed the Senate Standing Committee on Petroleum on the country’s fuel reserves and the impact of rising tensions in the Middle East on global energy supplies.

Sheikh said the country also had liquefied petroleum gas (LPG) reserves for nine days and JP-1 aviation fuel stocks for 14 days. The petroleum secretary said that around 70% of Pakistan’s petroleum supplies came from the Middle East and the ongoing regional tensions had disrupted shipments, with vessel movement currently affected.