Fuel Price Changes

There are reports that the government is considering chang­ing the rules on fortnightly price changes in fuel to make this a weekly exercise. A summary for this was looked at by the Cabinet on Thursday. This is being touted as one of the IMF’s demands going forward, even though the IMF itself has indicated that the Pakistani government has fulfilled all the demands the international lending body put forth. But it must be understood that while the government has done enough to get back into the programme, the IMF will continue advising on changes where needed, even after the first tranche has been released.

The IMF’s demand to ensure that the impact of fuel price chang­es is passed on to the final consumer is not new. Given our circu­lar debt and the inability of PSO to make payments to its sup­pliers, this might not be an unwise course. However, the burden borne by the average consumer as a result of this change could be stark if prices were to skyrocket due to the international mar­ket or a further drop in the Pak Rupee. There will be times when the prices might even benefit the government if the international market sees a decrease, but in cases of increases, the government will be instantly blamed.

If the rupee devaluation or the high inflation numbers were not a concern, our government should ideally be moving towards the market rate, without too many subsidies on fuel. This is because it remains an imported resource, and any extra cost borne by the national exchequer only adds to the government’s payables with­out anything to show for it.

Sadly, things are not that simple. The fuel prices impact every aspect of business and domestic consumption, but more than that, this past year they have gained even greater prominence af­ter the previous government took the populist decision to empty our coffers and pay for an unnecessary subsidy. Will the current government be able to chart a different path and take yet another difficult decision at the expense of its popularity?

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More