The government, late on Friday night, abruptly announced a massive hike of Rs. 55/liter to both petrol and diesel prices, mere hours after claiming the country had sufficient petroleum stocks for a month to ride out the crisis.
In a joint press conference alongside Deputy Prime Minister Ishaq Dar and Finance Minister Muhammad Aurangzeb, Petroleum Minister Ali Pervaiz Malik announced the massive jump to fuel rates, with Dar confirming the revised rates would go into effect from midnight. The announcements followed a day of panic, with citizens queuing up outside petrol pumps nationwide in a bid to fill their tanks before the anticipated new rates went into effect. As per routine, several pumps refused sales ahead of the deadline in a bid to extract the maximum profit off stocks purchased prior to the price jump.
According to Malik, the government has “manipulated” the petroleum development levy (PDL) to inflict the minimum possible impact on consumers. In practice, this means they have raised the PDL on petrol by Rs. 20/liter—raising it to Rs. 105/liter—while reducing the same on diesel to Rs. 57/liter. The ex-depot price of high-speed diesel now stands at Rs. 335.86/liter, up from the Rs. 280.86/liter announced less than a week ago. The revised ex-depot price of petrol, meanwhile, is Rs. 321.17/liter, up from Rs. 266.17/liter.
In a break from past practice, the prices would be revised weekly going forward.
Malik sought to defend the massive jump by blaming the joint U.S.-Israel attack on Iran, which has resulted in significant hikes to prices of fuel in the global market. “We do not know how long this crisis will continue, and there is no clear timeline for its end,” said the petroleum minister, maintaining the government would crack down on hoarding and artificial shortages.
He said Pakistan relied heavily on oil supplies passing through the Strait of Hormuz, effectively closed by Iran, adding two vessels of the Pakistan National Shipping Corporation are currently en route via Yanbu and Fujairah, bypassing the Strait to ensure continued fuel supplies. “As soon as the situation improves internationally, we will reduce prices at the same speed,” he claimed.
The deputy prime minister, meanwhile, said global prices had increased 50-70% due to the conflict, adding the government had tried to pass on the minimum possible impact to consumers. The finance minister reiterated that the country has sufficient petroleum reserves, adding the government would closely monitor the impact of rising fuel prices on exports and imports.
No relief
Contrary to earlier reports, the government did not announce any plans to curtail demand, essentially communicating to the public to bear with the massive price hike. A committee formed to monitor fuel prices had discussed plans such as staggered work-from-home and remote learning to reduce consumption, but Prime Minister Shehbaz Sharif opted to “shelve” this for at least a week.
During the press conference, the deputy prime minister maintained the government is attempting to reduce regional tensions in a bid to restore normalcy. However, he stressed, it remains unclear how long it will take to restore stability.