The petroleum product prices have proved to be the first casualty of the rupee depreciation. The 5.2 percent increase in motor gasoline prices for January 2018, marks the highest monthly increase in the recallable memory. International oil prices have rallied long and fast and are up by a third in less than six months. Brent was last seen trading at$66/bbl.

But in Pakistan’s case, the rupee dollar conversion seems to have made the telling difference. The near 4 percent drop in rupee’s value in December meant pricier oil at a higher conversion factor. Did it warrant a sudden jump of over 5 percent in petrol prices? It surely did, even without maneuvering the General Sales Tax and Petroleum Levy.

The oil prices were rather stable in December, going up by only 2 percent over November 2017. They had jacked up by 9 percent in October 2017, but the government’s response was a 1.9 percent increase in gasoline prices. Other instances of month-on-month rise in international oil prices from Jul-Sep resulted in little to no increase in petroleum product prices. That is where the real problem was.

Recall that the Finance Ministry in that period was briefly headed by Ishaq Dar who later went on leaves. The continuous court appearances and NAB proceedings meant he had little time to make the tough and right calls. His last few months ever since the NAB hearings cost the country some precious tax revenue. Miftah, in his first week at the office, has shown more clarity and sense of direction in taking the right yet tough step.

This column has long maintained that oil prices have to be a pass on item, especially when the oil import bill has reached new highs. Pricing is one critical tool to curb unnecessary demand, without hurting any taxation targets, as the necessary demand would ensure enough revenue is generated even at high rates.

The government had adopted the practice of fortnight petroleum products’ price revision, which for some reason was discontinued after just two months. That could still be adopted, especially in times of rising global oil prices, to reduce risk of losing out on revenues.

At the same time, an eye or two, need to be kept on the diesel prices. The GST on diesel still appears to be on the higher side, despite having come down from 35.5 percent in August 2017. Bear in mind, diesel price and consumption has more far reaching consequences on the broader economy, and the idea is to not curb the usage. Prices are high enough to achieve revenue collection targets, even if the GST is reduced to the standard 17 percent.