Petrol prices in Pakistan still cheap compared to rest of the world, says finance minister, day after price hike

Finance Minister Shaukat Tarin on Friday said petrol prices in Pakistan were cheaper than the rest of the region and the world, adding that only 16 countries had lower prices — all of them being oil producers themselves.

Addressing a press conference in Islamabad with Minister of State for Information Farrukh Habib, Tarin said: “There are only 16 other countries which have lower petrol prices than ours. They are oil producers and have their own oil.”

The finance minister added that Pakistan had cheaper petrol prices than other regional countries as well, such as India and Bangladesh. “We are cheaper than the [rest of the] region and the world as well. Do we want to reduce it (petrol price) further? absolutely,” Tarin said.

He said the current issue was if the government reduced prices then it would have to pay out of its pocket to fulfil revenue requirements. Tarin added that the petroleum levy had also been reduced to Rs2 to Rs3 per litre from Rs30/litre in 2018.

“We are not even charging [petroleum] levy even though we have kept a target of Rs600 billion for it in the budget. But we and the prime minister didn’t care for it.

“The prime minister said that we can’t burden the people further so this is a signal [about] what feelings the current ruler has for the poor,” the finance minister said.

His comments came a day after the government increased the petrol price by Rs4 per litre. The price of petrol stands at Rs127.30 per litre from October 1 (today).

In a press release, the Finance Division said the Oil and Gas Regulatory Authority had worked out higher petroleum prices based on an increase in prices in the international market as well as exchange rate variations in the last two weeks.

However, Prime Minister Imran Khan had “decided against the recommendation and passed on the minimum increase in prices to the consumers”, it stated.

The government absorbed the higher international pressure of prices through a reduction in the petroleum levy and the sales tax, according to the notification. “Petroleum prices in Pakistan are the cheapest in the region,” it had said.

Prices of other essentials

During his press conference today, the finance minister also addressed the issue of inflation and the prices of other essentials, saying that prices were being impacted all over the world due to the Covid-19 pandemic.

“This disruption from Covid has impacted us as well and international prices currently are at their highest level in the last 10 to 12 years.

“We have been affected by that as well because we have become a food importer. We did not become a food importer in only three years but we are facing the consequences of inadequacies in the agricultural sector for the last 30 years,” Tarin explained.

He said the government was investing in agriculture to increase productivity and self-reliance so payments to foreigners could be diverted to local producers. Tarin also outlined measures to provide relief to the general public in the prices of food essentials such as wheat, sugar and ghee.

Furthermore, he added, direct food subsidies would be provided from October to the lowest segment of society comprising around 12.5 million households.

He also outlined measures for agricultural reforms such as curbing middlemen profits in the agricultural supply chains.

Regarding the overall economic situation of the country, Tarin said it had started growing and its effects were being felt on revenue collection with the Federal Board of Revenue exceeding its targets.

“When our economy grows by more than five per cent then it will have a trickle-down effect,” the finance minister said, adding that growth was being witnessed in industry, agriculture and services sectors.

Tarin also said the ‘Kamyab Pakistan Programme’ would be launched very soon and four to six million households would be directly helped,

The finance minister said that distributing cash handouts through the Ehsaas programme was not a “permanent solution”.

“We will teach people how to catch fish and not just give them fish so they can stand on their own feet,” he added.

Regarding negotiations with the International Monetary Fund (IMF) on the power sector, he said the government would present alternative formulae and propose that raising tariffs was not the solution.

“I am hopeful we will have a constructive discussion with the IMF and we will come to a solution.”

‘Consistent pattern of blame on external factors’

Meanwhile, the finance minister’s attribution of price increases to the Covid-19 pandemic drew criticism from PML-N President Shehbaz Sharif.

He said singling out Covid-19 for blame was not only bad leadership but showed a “consistent pattern of putting blame on external factors to shirk responsibility”.

PPP Chairman Bilawal Bhutto-Zardari too launched a blistering attack against the government and rejected the increase in prices of petroleum products.

“People are burning in the fire of historic inflation [and a] further increase in petrol prices is tantamount to fanning the flames.

“Taxes on petroleum products are an important source of revenue for the PTI government after ruining the economy,” he said.

Bilawal said the people longed for relief and any good news from the incumbent government. “[Prime Minister] Imran Khan should take another U-turn in the wider national interest [and] turn [back] his policies [by] 180 degrees,” he added.

The PPP chairman demanded that the increase in petrol prices along with additional taxes and duties should be withdrawn.