ISLAMABAD, March 2: Prime Minister Raja Pervez Ashraf ordered reversal of the hike in prices of petroleum products on Saturday in an attempt to silence opposition by members of his own party who described the increase as ill-advised in the build-up to the general election.
The National Assembly, too, has seen protests and walkouts by opposition parties in protest against the hike.
The prime minister summoned Finance Minister Saleem H. Mandviwalla to the PM House on Saturday and directed him to withdraw the price increases of petroleum products announced two days ago.
According to a statement issued by the PM Media Cell, the prime minister said “democratic government should not increase financial burden on the common man”. He emphasised that his government accorded top priority to the welfare of people and would pursue policies to facilitate them.
“The people’s government will not impose any additional burden on the common man and will do its utmost to alleviate the sufferings of the people,” the statement quoted the prime minister as saying.
An increase of about four per cent was announced on Thursday in the prices of petrol and other petroleum products for the month of March.
According to the notification, from March 1 the price of petrol would have risen by Rs3.53 per litre (3.42 per cent) to Rs106.60; high speed diesel by Rs4.35 (3.99 per cent) to Rs113.56; kerosene by Rs3.75 (3.76 per cent) to Rs103.69; and light diesel by Rs3.93 (4.2 per cent) to Rs98.25.
Following the new directives of the prime minister, the prices would revert to the Feb 28.
Although the decision to withdraw the jump in prices was welcome by general public, it created a confusion and a tug of war between two federal ministries — finance and petroleum. Officials in the two ministries are scratching their heads to workout who would bear the burden of additional payment in terms of price differentials.
The total difference in monetary terms after reversion to the previous structure would be around Rs5 billion. Oil marketing companies, through the petroleum ministry, have been calling for adjustment through cuts in government taxes.
“The reduction should be made through cuts in government tax on petroleum products termed as petroleum levy,” said an official of an oil marketing company who remains in touch with the officials of Ogra and petroleum ministry.
He expressed concern about the repayment of the amount termed as Price Differential Claims (PDC) in the view that the government is set to depart in a few days.
At present the petroleum levy on diesel is Rs8 per litre and petrol Rs10 per litre. Diesel and petrol are the two main petroleum products consumed in the country.
The average consumption of diesel during March as estimated by oil companies is around 620,000 tons, while petrol consumption is expected to be around 248,000 tons.
However, the finance ministry maintains that oil marketing companies should bear the differential of Rs5 billion for the time being and that the amount will be adjusted gradually in future.
“This is a long-term business and not a day-to-day affair,” said an official of the finance ministry, adding that a similar arrangement was made by the previous government in the election year and it was cleared by the current government when it came into power.
The finance ministry is in favour of saving the amount of Rs5 billion ahead of the next budget.
However, after deliberations it was decided that the difference would be adjusted through petroleum levy and it would be Rs6.47 for every litre of petrol sold and Rs3.65 for diesel for the month of March.