Opposition up in arms as govt tries to justify record hike in petrol prices

Updated June 27, 2020

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SAPM on Petroleum Nadeem Babar (L) and Petroleum Minister Omar Ayub Khan address the media in Islamabad. — DawnNewsTV
SAPM on Petroleum Nadeem Babar (L) and Petroleum Minister Omar Ayub Khan address the media in Islamabad. — DawnNewsTV

Petroleum Minister Omar Ayub Khan on Saturday defended the government's decision to increase the price of all petroleum products in the country, saying that it had tried to provide relief to the people amid rising international prices.

Addressing a press conference with Special Assistant to the Prime Minister on Petroleum Division Nadeem Babar, he said that prices in the international market had risen by 112 per cent over the last 40 days.

In a sudden move on Friday evening, the government had increased the prices of all petroleum products by up to nearly Rs26 to share the impact of rising international prices with the consumers.

The price of petrol (motor spirit) was raised by a whopping Rs25.58 to Rs100.10 per litre from the existing Rs74.52, an increase of 25.6 per cent.

During the press conference, Babar explained that the government set the prices of petroleum products on the basis of Pakistan State Oil's (PSO) monthly average. Like other government functionaries, he highlighted that Pakistan had the lowest prices among South and Southeast Asian countries.

"The price of petrol is Rs180 in India, Rs108 in Indonesia, Rs153 in the Philippines, Rs159 in Thailand and Rs196 in Japan," he said, adding that the government had continued passing on the effects of falling prices to the public.

Giving an "example", he said that on February 28, before the pandemic started, petrol was priced at Rs116.60 and diesel cost Rs127.26. On June 1, the price of petrol was reduced by Rs42 and that of diesel by Rs47. He added that the government, despite its "lesser purchasing power", was trying to charge as less as it could.

Explaining why the government had announced the new fuel prices on June 26 instead of July 1, he said that according to calculations, if the "last cargo was priced at the current rate, there would be an increase of Rs31-32" in petrol prices.

"We didn't want to do this," he said, adding that by increasing prices earlier, the government had reduced the total increase by spreading it over 35 days. "This means all the oil marketing companies (OMCs) will also face a minor loss in July [but there will be] net benefit for consumers."

Referring to the oil crisis, Babar claimed that the reason behind it was "hoarding by certain OMCs".

"Nearly all OMCs did not have stock of 21 days as per licencing agreements; PSO had an 18-day stock too. Not only did we repeatedly ask the Oil and Gas Regulatory Authority (Ogra) to issue notices to these companies, but also asked PSO to import more to fill this gap.

"Unless Ogra is strengthened and enforcement capability made so strong that it takes action against companies not keeping proper stocks, this is likely to happen again," he cautioned. "[The government] will change rules and if needed then the Act itself [to ensure this does not happen].

"At this time, there are 9,000 legal registered petrol pumps, which means they sell oil at some OMC level whereas there are 1,500 or more illegal pumps which have no agreement with any OMC. The government will crack down on these.

"Because the price had risen to very high levels in the international market and the price here was very low, companies started hoarding. This is why committees conducted raids. We have to get rid of this once and for all. We will change rules and laws and take administrative action against illegal pumps. It is unfair that the government cannot provide relief to the people when it wants to."

Khan criticised the PML-N and alleged that when an investigation was instituted during the PML-N's tenure, the [then] finance minister called Investigation Officer Tariq Khosa to his office and asked him to stop the investigation.

"The PML-N gave protection to these mafias. On the contrary, the premier's stance is to break the back of and end these mafias and to go to the very end to do so."

Earlier in the day, Information Minister Shibli Faraz tweeted that the pandemic had affected all economies of the world. "Such an increase in international prices has not been seen which is why we had to review our prices too.

"There has been less increase in Pakistan as compared to other countries in the region. Benefit of the people is our first priority and we will continue trying to provide them relief."

'Sugar scandal part two'

Also on Saturday, Opposition Leader in the National Assembly and PML-N president Shehbaz Sharif rejected the government's increase in petrol prices and termed it an "atrocity".

Terming it "sugar scandal part two", Sharif said that the prime minister's statements about caring for the people had been "proven hollow".

He claimed that the PTI government had "played a horrific game with the masses", saying this was "proof the government did not want the economy to run".

"After the sugar mafia, the petrol mafia has won. The government has given the petrol mafia licence to loot the public. Thus proven that this is a government of inefficient, insensitive and oppressive people. An oppressive government cannot continue," he said in a statement.

He demanded that the government "immediately" take back the increase in prices, saying that this was "not the time to clean the people's pockets".

"We will protest against this atrocity on every forum including the parliament," he said.

PPP chairperson Bilawal Bhutto-Zardari also rejected the hike in prices. "Increasing petrol prices at a time when the public should be given further relief is anti-people. Those who have increased the prices by a record high are the same ones who used to criticise minor increases previously," he said.

He claimed that the prime minister "could not support the sinking economy as a result of his own inefficiency by looting the people's pockets".

"Imran Khan has allowed the mafias to benefit by first reducing the prices so it (fuel) could be hoarded and then increasing them. The premier has no worry about the people," he added.