The government made the much-anticipated but dreadful announcement to increase the prices of petroleum products by a massive Rs12 per litre. These are the highest ever prices of products and perhaps the biggest hike in a single go as citizens brace themselves for a new wave of inflation.
The government has passed on the impact of higher international oil prices and imposition of additional petroleum levy as committed to the IMF for revival of the bailout programme. Global crude prices have increased to $95 per barrel in the international market amid rising geopolitical tensions. Oil prices are expected to rise seven-year high of $100 per barrel if the situation worsens.
The prime minister has approved increasing petrol prices in line with the change in international market. The finance ministry said the prices were at its highest level since 2014 when they hovered around Rs120 per litre. It still claims the government is still a subsidy by not increasing GST and bearing revenue loss of Rs35 billion fortnightly.
Petroleum and diesel are two major products that generate the most revenue due to their massive and growing consumption. Average petrol sales are around 750,000 tonnes per month against the monthly consumption of around 800,000 tonnes of diesel. The government argues that Pakistan is an oil-importing nation and thus has to face the brunt of global prices hikes.
The historic hike in prices has certainly drawn condemnation from opposition parties and the public. PML-N President Shehbaz Sharif accused the PTI government of being “insensitive and heartless” to the sufferings of the masses and that it would get a befitting lesson in the next elections. Other opposition leaders have also criticized the rate hike, saying citizens will not accept it any cost.
The prices of petrol have reached its highest level during the PTI government’s tenure. Yet, it claims that the economy is on the right track and Pakistan is in a better positioning than past decades. Pakistan has not found sustainable alternatives to petroleum and the growing fuel consumption has an adverse impact on the economy. The government may not be able to control oil prices but it needs to take drastic measures to offset the hike and provide relief to the masses.
