Oil marketing companies and refineries have warned the government of brewing a fuel crisis in-country in the wake of Prime Minister Imran Khan’s announcement of freezing petroleum product prices until the next budget.
On Monday, Prime Minister Imran Khan announced economic relief measures. In his address to the nation, the prime minister said the government was reducing petrol, diesel, and electricity prices and that they would not be increased till the next budget, which will be announced in June.
In response to the impact of PM’s announcement, a virtual meeting between the Oil and Gas Regulatory Authority (OGRA) and the petroleum division was held in Islamabad, in which oil marketing companies and refineries expressed serious concerns and questioned the mechanism of fuel price adjustment.
How can we sell petroleum products at cheap prices when we are buying them at an expensive rate from the international market? And who will pay the price difference? At the meeting, authorities questioned oil marketing companies and refineries.
According to the sources, the secretary of petroleum has said that the government was preparing a price adjustment mechanism. However, the government would pay later. Till then, oil marketing companies and refineries should bear the price difference.
In response to the secretary of petroleum’s answer, oil marketing companies and refineries said that the situation doesn’t seem to be sustainable as the country may face an interruption in the supply of petroleum products.
However, the government should provide a guarantee for the price adjustment payments.
Petrol prices slashed by Rs10 per litre; rates not to be increased until budget
In a surprising move on Monday, Prime Minister Imran Khan announced that he was slashing petrol and diesel prices by Rs10 per liter.
At the outset of his speech, PM Imran Khan announced that everybody was of the view that increasing commodity and oil prices were a temporary phenomenon. However, in line with the ongoing situation in Ukraine, the government realized that prices would not fall in the international market.
PM Imran Khan further said that since Pakistan imports petrol, if the prices increase in the international market, there is nothing the government could do.
Sharing details of petrol prices in other countries, the premier said that “in Pakistan, the price of petrol is still the lowest in the world.”
New petrol price set at Rs149.86
According to a statement issued by the Finance Division, the global petroleum products’ prices are tracking the Ukraine-Russia war and have resultantly surged to $100 per barrel.
“The unprecedented increase is very risky for domestic fuel prices and inflation,” it said, adding that the situation leaves very few options for the government.
It further added that in the fortnightly review due on February 28, OGRA has recommended an Rs10 per liter increase in the petroleum products prices.
In his address to the nation, the prime minister not only rejected the increase but also announced a plan to reduce the prices of petroleum products by Rs10 per liter in order to provide maximum relief to consumers, despite the limited fiscal space, according to the statement.