n Finance minister explains PM approved price increase n Says govt to increase petroleum levy on oil products by Rs10 per litre from September as per IMF deal n IMF board to meet on Aug 29 to take up loan tranches.

 

ISLAMABAD    -   While defending the recent increase in petrol price, Finance Minister Miftah Ismail on Tuesday announced that the government would further enhance the petroleum levy by Rs10 per litre on oil products from September as per agreement with the International Monetary Fund (IMF).

Addressing a press conference, the minister defended the recent increase in petrol price by Rs6.72 per litre after facing strong criticism from his own party, PML-N and its coalition partners, PPP, MQM and others.

He clarified that he had not stated that he would not increase the price of petroleum products. “I had never said that I will not increase the price of petrol, I had stated that I will not be imposing taxes [on petroleum products].”

Mifth Ismail said that Oil and Gas Regulatory Authority (OGRA) has determined the oil products in consultation with the Petroleum Division. The ministry of finance role is to change the rate tax or levy on it. However, in the recent decision, the government has not imposed additional tax on oil products. He defended the decision. “I stand by all the decisions of the government and the decision to raise the petroleum prices was the right one.” He clarified that Prime Minister Shehbaz Sharif gave approval for the hike in petrol prices. “It is a right decision and I fully endorse it,” he added.

He said that the government would pass on the impact of the prices in next few weeks if oil prices decline in the international market and currency appreciation continues. He informed that price of petrol is still low as compared to that in other countries. Price of petrol in India is Rs303 per liter while in Bangladesh it is being sold at Rs308. In Pakistan, petrol price is Rs233.91 per litre.

Earlier, on twitter, the Finance Minister gave s brief explanation on how petrol and diesel prices are set in Pakistan. The OGRA takes the average of Platt prices, adds freight and premium paid by PSO on top of these prices, and multiplies that by the exchange rate. In addition it also “trues up” the previous fortnight’s cost by taking into account the rupees paid by PSO at the actual exchange rate as opposed to the average used to estimate the previous fortnight’s cost. The price of petrol has gone up (and diesel has gone down) because the cost paid by PSO in the previous fortnight was more than the cost estimated by OGRA and also because the premium paid by PSO on petrol increased and premium paid on diesel remained unchanged. Again, not one paisa of new taxes or levies was added.

To a question about levy, the Finance Minister informed the media that the government would increase petroleum levy on oil products by Rs10 per litre from September as according to the agreement with the IMF. The government is already charging Rs20 per litre petroleum levy on petrol. He said that he respects the PPP leadership and would address their reservations over the decision related to the prices of petroleum products.

Talking about the IMF’s programme, Miftah Ismail said that Executive Board of the IMF would meet on August 29 to approve loan tranche for Pakistan. He said that the Fund has sent letter of Intent, which would be signed tonight. “The IMF program has already begun,’ he added.  He further said that the economy is improving and the government’s next target is to control inflation.

He said that rupee value has improved from last few days, which was out of control in July this year. The rupee has continuously been appreciating since the 1st of this month due to curbs imposed on imports of non-essential items. Rupee has been the best performing currency in the world so far this month. The Karachi Stock Market is the fastest moving stock market in the world.

Miftah added that it was always his belief that once the imports fall, the rupee will ultimately strengthen. “We imposed a ban on non-essential commodities.” The inflow of dollars is $4.1 billion as against the outflow of $3.4 billion in so far period of the current month.

He once again criticized the previous government for recording highest ever trade deficit of $48.3 billion in last fiscal year, as the imports had touched $80 billion against the $31.7 billion exports. He further said that previous government had borrowed Rs19.3 trillion, which is 79 percent of the overall borrowing made by the country.

The power sector circular debt has swelled to Rs2.6 trillion and gas sector’s circular debt to Rs1.4 trillion. The PTI government did not buy the cheap Liquefied Natural Gas (LNG).

“The previous government did not make even a single cheap petrol and diesel contract”.  Furthermore, the previous government had violated the IMF agreement by giving subsidy on oil products and electricity and announcing tax amnesty scheme for industrialists. They left behind 10.3 billion dollars in foreign reserves and we have to return loan of twenty-one billion dollars during the current fiscal year. The PTI government has left the economy in a complete shambles. “Imran Khan did not target us (the incoming government), but he targeted Pakistan’s economy,” Miftah said, indicating the previous regime’s decision to give petroleum subsidies.

The Finance Minister said the present government has averted default by taking difficult political decisions and a beginning has been made to put the economy on sound footing.

He clarified that no mini budget would be announced. The government in budget had projected to collect Rs42 billion from traders through fix taxation system in electricity bills. However, it was mistake of the government, which had lowered the electricity bill collection. However, the government would collect Rs27 billion from traders through old method and remaining Rs15 billion through other avenues, yet to be determined.

Earlier, addressing the “All Parties Conference for Revival of Economy” organized by Islamabad Chamber of Commerce & Industry (ICCI) in collaboration with National Press Club (NPC), the finance minister said that the incumbent government is ready to formulate charter of economy with all stakeholders for formulating long term policies for economic development of the country.

He said that Prime Minister Shehbaz Sharif had already invited all the stakeholders to formulate a charter of economy. The charter of economy should not be limited only to the political parties, but all other stakeholders including chambers and media would also be part of it, the Finance Minister said.

He asked the business community to play their role for human development and contribute their due shares in establishing education and health care facilities to improve human index in the country.

He has emphasized on four key areas for long term national growth and development including boost in agricultural productivity, exports, access to quality education and controlling expenditures. He said no country can be free unless it is economically self-reliant.

Zardari follows Nawaz, Maryam to reject petrol price hike

Pakistan People’s Party co-chairman Asif Ali Zardari yesterday rejected the hike in petroleum products prices, and said that PPP was not consulted over the controversial decision.

Zardari expressed his displeasure over the hike in the prices of petroleum products by the coalition government – led by the Pakistan Muslim League (Nawaz). The PPP is a key partner of the government.

“The Pakistan People’s Party is part of the government and such decisions must be taken with the consultation of the collision partners. We formed this government to provide relief to the masses,” he said in a late night statement.

Zardari said that he still supports Prime Minister Shehbaz Sharif and “soon I will be meeting him.”

Before Zardari, PML-N supremo Nawaz Sharif and PML-N vice president Maryam Nawaz also opposed the increase in fuel rates.

Nawaz Sharif reportedly walked out of the PML-N virtual meeting over the issue and made it clear he would not support any further burden on the common man.

Maryam Nawaz Sharif   “strongly opposed” the government’s decision to raise petroleum prices.

In a tweet, Maryam Nawaz said that Nawaz Sharif walked out of a meeting after saying that he “cannot even burden the people with another penny,” and that “if the government’s hands are tied, then I (Nawaz Sharif), am not party to this decision.”

Maryam Nawaz also distanced herself from the decision, saying that she “stands with the people” and cannot support this decision.

Earlier, the government increased petrol price by Rs 6.72 per litre, while slashed diesel price by Rs 0.51. The price of petrol is now at Rs 233.91 per litre, diesel Rs 244.44 per litre, kerosene oil Rs 199.40 per litre and the price of light diesel oil is at Rs191.75 per litre.