–Price of petrol and high-speed diesel increased by Rs6 after govt okays hike in POL prices
ISLAMABAD: The federal government on Sunday increased prices of petroleum products once again, further burdening already suffering masses — courtesy to the economic policies of the government.
At a time when Pakistan is already exploring for reserves of oil and gas in the Arabia Sea, the government approved an increase of Rs6 per litre for petrol, Rs6 per litre for high-speed diesel and Rs3 each for light-speed diesel and kerosene oil, w.e.f April 1.
The decision was taken in the wake of a slight increase in the international crude price and currency devaluation. According to the finance ministry, the government has reduced the price hike by nearly 50 per cent when compared to the actual price increase proposed by Oil and Gas Regulatory Authority (OGRA) in its summary submitted for approval.
Over the last few months, the government had started increasing petroleum levy rates to partially recoup a major revenue shortfall faced by the Federal Board of Revenue (FBR). Petroleum products remain in the federal kitty unlike GST that goes to the divisible pool of taxes and thus about 57 per cent share is grabbed by the provinces.
The State Bank of Pakistan has already let the rupee depreciate by Rs0.49 to a new all-time low at Rs140.78 to the US dollar in the inter-bank market ahead of an expected agreement with the International Monetary Fund for a long-term loan programme.
Finance Minister Asad Umar says the government would secure a bailout package from the IMF of between $6 billion and $12bn by mid-May.
In addition, the PTI administration had hiked power-cum-gas charges, announced a mini budget with a new set of tax reforms and increased the interest rate.
And now with the new hike in the petroleum products, there is a high probability that the country would suffer from record inflation, owing to a balance-of-payment crisis.
Economic expert Uzair Younus tweeted, “Economy has slowed down, and will continue to slow down in the coming months. This will happen while inflation remains high due to increase in energy prices and impact of currency depreciation.”
“Rising oil prices mean that the deficit didn’t improve by as much,” he added.
Former finance minister Miftah Ismail also took to Twitter to express his concerns over the escalating rates of medicines amid hike in the petroleum prices.
He said, “Government had claimed that it would allow only 15% increase. But these prices have increased by a lot more. Sometimes close to 100%. I think the government should ask these companies why have they raised the price so much?”
On Friday, OGRA had moved a summary to increase the petroleum prices from April 1. The body had demanded an increase of Rs11.92 per litre in the petrol price, Rs11.17 per litre diesel and Rs6.65 per litre kerosene oil.
The oil regulatory authority had calculated the ex-depot rate of HSD at Rs122.60 per litre from about Rs111.43, showing an increase of 10 per cent. Likewise, the ex-depot petrol price was proposed to go up to Rs104.80 per litre from the existing rate of Rs92.89 per litre, up by 12.8 per cent.
Reportedly, the summary moved to the government contained calculations on petroleum prices on the basis of existing rates of general sales tax and petroleum levy. The price of Brent benchmark had increased by less than 2 per cent over the last month from $66.57 on Feb 28 to $67.86 per barrel on March 28.
The price of kerosene had been proposed to be set at Rs92.96 per litre instead of Rs86.31, an increase of 7.7 per cent. The ex-depot price of LDO has been worked out at Rs84.03 per litre instead of existing Rs77.54 per litre, an increase of 8.4 per cent.
The hike has already been challenged at the Lahore High Court (LHC) in March. The federal government and OGRA were made respondents in the petition. According to the petitioner, the government’s claim regarding the increase in the prices across the world was “baseless”.
The increase in petroleum products’ prices by the government was due to additional sales tax collection, the petitioner argued, adding that due to scaling up prices, inflation would also be increased across the country. He said the oil prices’ increase was a violation of the Article 14-9 and Article 18 of the Constitution.
The petitioner further said that in the rest of the world, petroleum prices had been reduced while they had been increased in Pakistan. He said that to receive more than 17 per cent tax upon petroleum products was unconstitutional, therefore, the court should nullify the government’s decision for charging additional sales tax and order for the reduction in prices.