Caretaker govt hikes power tariff, petroleum prices
By Syed Irfan Raza
ISLAMABAD, Feb 29: The caretaker government on Friday took a much delayed but crucial decision to increase power tariff and petroleum prices which will help the new government to the extent that it will not be blamed for the hike which will push up prices of most essential goods in the country.
The power tariff has been increased by nine per cent. Prices of petrol and HOBC have been raised by Rs5 per litre and that of kerosene oil and light diesel oil by Rs3.5 per litre.
The new rates will apply from Saturday March 1, says a handout issued by the Oil and Gas Regulatory Authority (Ogra).
The hike in petroleum prices was necessitated by constant increases in oil prices in the international market but critics said the caretakers should have gone for periodic increases over the last three months, but for some unexplained reasons the decision was delayed.The nine per cent hike in the electricity tariff will increase its price at the consumer end by Rs38 paisa per unit.
No notification of power tariff increase has been issued and it is expected in a few days.
After the announcement of new ex-depot sale prices of petroleum products by Ogra, the price of motor spirit will go up to Rs58.70 per litre from Rs53.70, HOBC price will rise to Rs69.88 per litre from Rs64.88, kerosene oil price has increased to Rs38.72 per litre from Rs35.23 and the price of light diesel oil has been fixed to Rs36.07 per litre from 32.07.
“We have increased the price to match international prices and to facilitate the new government,” caretaker Finance Minister Dr Salman Shah told a private TV channel.
He said the caretaker government wanted to reduce the burden on the new government because it could be difficult for it to take such a hard decision in the beginning.
Dr Shah said many countries, including India, had recently taken a similar decision and raised petroleum prices in accordance with the international market.
He said the prices of furnace oil were stable and a decision about an increase in its prices would be taken later.
“Delay in revision of oil prices was causing direct impact on national budget and therefore, the increase was imperative. But I assure the people that it is the minimum increase,” he added.
Justifying the increase, Ogra said that the price of petroleum products in the international market had shown the record surge over the past several months which compelled the government to pass on part of the increase on consumers.
A spokesman for Ogra said the government would continue to provide a subsidy of Rs16.82 per litre on kerosene oil and Rs15.30 per litre on light diesel after the price increase.
He said that the price computation had been carried out by Ogra in accordance with the formula prescribed by the federal government.
“It requires that the price be based on average Arab Gulf prices for the last fortnight for Naphtha, diesel, kerosene and HSFO to which Inland Fright Equalisation Margin (IFEM) is added which reflects estimated transportation cost of the products to 29 depots in the country, for the purpose of price equalisation,” says the handout.
Economists said that petroleum prices had been increasing in the international market for the past few months, but the caretakers as well as the previous Shaukat Aziz government at the twilight of its tenure were reluctant to take hard decision of increasing the prices because it was the election year.
They said the direct burden of increase in the prices of petrol and diesel could be avoided had the former government increased the prices systematically.
“There will be a direct impact of oil price hike on the transport sector which will raise transport charges and cause overall price hike in the country,” they said.
The Pakistan People’s Party (PPP) which is likely to form the new government at the centre had already demanded that the caretakers should revise the petroleum prices before the formation of the new set-up so that the new government would not be blamed for the overall price hike to be caused by increasing oil prices.
However, the PPP and the PML-N blamed the previous government for the sudden raise of Rs5 in the price of petrol and Rs3.5 in diesel rates.
PPP secretary-general Jehangir Badar and PML-N chairman Raja Zafarul Haq said there would have been no burden on the people if oil prices would have been increased systematically.
The price of crude recently made a record jump touching $102 per barrel in the international market.
Analysts said it was because of continuous devaluing of dollar and hike in the gold prices in the international market.
