PM Shehbaz rejects OGRA summary, decides against increasing petrol prices
- OGRA had earlier proposed a rate hike of as much as Rs119.88 per litre
The government has decided against increasing petrol prices, rejecting a summary by the Oil and Gas Regulatory Authority (Ogra) that had recommended a hike of as much as Rs119.88 per litre.
Addressing a press conference, Pakistan Muslim League-Nawaz's (PML-N) Shahid Khaqan Abbasi said the summary by OGRA was rejected by the premier.
OGRA's recommendations
Earlier, Ogra had recommended an increase of nearly Rs120 per litre (over 83%) in the price of high speed diesel with effect from April 16. It also recommended an increase of Rs83.50 per litre in the price of petrol. However, these recommendations were based on the working of advised petroleum levy (Rs30) and 17% GST.
In the case the government had decided to notify prices at existing petroleum levy (which stands at zero), and GST (also at 0%), the Ogra still recommended increasing the price of high speed diesel by Rs51.52, which would have taken the new price to Rs195.67 per litre. In the case of petrol, the price would have seen an increase of Rs21.3 that would have taken the rate to Rs171.16 per litre.
The new government, led by Prime Minister Shehbaz Sharif, had been in internal discussions on whether to roll back fuel and power subsidies that have blown a hole in Pakistan's public finances amid a stuttering economy.
Former premier Imran Khan, who was ousted in a confidence vote, had announced the cut in petrol and electricity prices in February despite soaring global prices in a bid to win back popular support. He also announced freezing the rates till the budget announcement.
But that relief measure, estimated at Rs373 billion, stretched government finances, while also endangering an ongoing International Monetary Fund (IMF) programme.
Many analysts commented that the subsidy on fuel, without an accompanying rise in productivity, would hamper Pakistan's economic growth vision, while others said increasing rates may lead to further inflation, which would be irreversible given pass-through costs are rarely taken back even if fuel costs come down.
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