Petroleum Pricing Decision
One of the first tasks set before newly appointed Prime Minister Shehbaz Sharif was setting the prices of petroleum products. The Oil and Gas Regulatory Authority (OGRA) proposed a price hike for the period of April 16 to 30 in order to cover for expenses incurred due the previous government’s decision to fix the rates of the commodity and impose subsidies that came out of the national exchequer. Acting with the same motivation of providing relief, PM Shehbaz Sharif rejected the proposal for a price hike but this move is likely to be reversed to protect from the multi-billion-rupee loss that looms over the government’s head.
While discussing this issue, Miftah Ismail—the likely finance minister—pointed blame at the PTI government which was losing over Rs.21 per liter on petrol and Rs.52 per liter on diesel. This meant that the government would lose Rs.2.5 billion on a daily basis, and Rs.36 billion in two weeks, which is much more than what can be afforded. In fact, this expense runs higher than the cost of running the entire civilian government and the Ehsaas programme.
There is also a threat of complete alienation by the IMF which expressed its dissatisfaction over the rejection to raise petroleum prices and impose taxes that were an integral part of the resumption of the Extended Fund Facility (EFF). The announcement of such facts by the new government clearly shows that there is clear recognition of what the problem is and what solution is needed. To blame the previous government yet continue the same strategies that perpetuated the issue in the first place is just as problematic and it is good to see that potential office holders from the same party are highlighting the lapse in judgement and working towards correcting it.
No government will want to make the lives of its people tougher but, there are some hard steps that must be taken to prevent the complete collapse of the country’s financial position. Otherwise, we may be paying more than Rs.240 billion to cover up for the loss incurred from further subsidies from our own resources which will only reduce public spending in other sectors, hampering development and the overall well-being of the state. For short-term relief in the status quo, we cannot compromise on the future of the country. The government could consider reducing other non-development expenditure to cover the deficit, but this will prove to be politically difficult. Tough decisions will have to be made.