Finance Minister Ishaq Dar on Sunday morning announced a Rs35 increase in the prices of petrol and diesel, in a televised address just minutes before the new prices went into force. In the address, which began at 10:50am, Dar unveiled the price revision that went into effect at 11:00am — 10 minutes later. Dar announces 35-rupee hike in petrol price. Reason behind sudden hike in petrol prices in Pakistan.
He said that speculation was rife on social media regarding an Rs50 increase in the prices of petrol and diesel. “Because of this, we have received reports of artificial shortages in the market.”
“The Pakistani rupee saw devaluation last week […] and now we are seeing an 11 percent increase in the prices of petroleum products in the international market,” he said. The minister recalled that in the last four months, from October to Jan 29, the price of petrol was not increased. In fact, he went on, the prices of diesel and kerosene oil decreased.
“Despite international prices and rupee devaluation, on directions of Prime Minister Shehbaz Sharif, we have decided to increase the minimum price of these four products. “We have decided to increase the price of petrol and diesel by Rs35. The price of kerosene oil and light diesel oil has been increased by Rs18,” Dar said, adding that the new prices would come into effect at 11 am today.
The minister further hoped that the announcement of new prices would dispel rumors about petrol supplies running dry. “This rise is being done immediately on the recommendation of the oil and gas regulatory authority who said there were reports of artificial shortages and hoarding of fuel in anticipation of price rises hence this price rise is being done immediately to combat this.”
Commenting on the development, Fahad Raud, head of equities at Ismail Iqbal Securities, said that the petrol price hike was “in line with expectations”. “This is only a partial increase as it does not incorporate recent exchange rate depreciation. More increase to come in mid-February,” he tweeted.
Reason behind sudden hike in petrol prices in Pakistan. The decision came days before an International Monetary Fund mission will visit Pakistan later this month to discuss the stalled ninth review of the country’s current funding programme.
Last week, the Pakistani rupee lost close to 12 per cent of its value after the removal of price caps that were imposed by the government but which were opposed by the IMF. Pakistan is in the midst of a balance of payments crisis and the plummeting value of the Pakistani rupee will push up the price of imported goods. Energy comprises a large part of Pakistan’s import bill.
A successful IMF visit is critical for Pakistan, which is facing an increasingly acute balance of payments crisis and is desperate to secure external financing, with less than three weeks’ worth of import cover in its foreign exchange reserves.
