KARACHI: Pakistan on Saturday defended its whopping, unscheduled price hike of petroleum products a day after the rate surge, and said the new price of oil remained lower than tariffs in neighboring countries like India and Bangladesh.
The Pakistan government on Friday increased the price of petroleum products by between 27 percent to 66 percent. This translated into petrol tariffs raised overnight by Rs25.58 per liter and diesel rates increased by Rs21.31 per liter, according to a notification issued by the finance division.
“The prices in Pakistan are lowest in the region despite the recent increase. The price of petrol has increased by 112% over the last 46 days in the international market,” Omar Ayub Khan, Federal Minister for Power and Petroleum, said on Saturday in the National Assembly, and added the government had still not passed on the full burden of the international price increase.
But Friday’s move was unusual and came unprompted by any summary moved by the oil sector regulator, OGRA. Under normal procedure, OGRA recommends new rates in a summary to the government at the end of every month. This time, the rates were increased on the recommendation of the petroleum division.
Nadeem Babar, Special Assistant to the Prime Minister on petroleum, said the prices had been announced five days ahead of time to reduce losses incurred by oil market companies who were importing at higher costs and selling at lower rates.
Petroleum sector analysts agreed and said the government’s decision to increase prices before the expected time will work solely to decrease oil company losses.
“The oil market companies are incurring huge losses and the government’s move to raise price has just mitigated the losses,” Dr. Nazar Abbas Zaidi, former Secretary of the Oil Companies Advisory Council (OCAC) told Arab News on Saturday.
On Thursday, Prime Minister Imran Khan ordered action against nine oil market companies for hoarding and black marketing. Action against them included directions to cancel licenses and the arrest of officials after an inquiry body, the fuel crisis committee, found them involved in deliberately creating petrol shortages in the country by hoarding fuel despite having excess stock. 
But no FIR has so far been filed against any of the companies, the Islamabad High Court was told on Friday.
Since March 1, 2020, Pakistan reduced the price of petroleum products four times due to the international market price crash. But oil market companies failed to meet supply.
Experts generally agree Friday’s drastic price hike has been taken to address these ongoing supply disruptions, with the shortages caused in large part due to a pricing dispute between the government and the industry.
Meanwhile, opposition lawmakers criticized the government for the record price increase, and said there was no transparency or communication among members of the energy committee.
“There is no transparency in the government’s dealings. The developments are not shared with the members of the committee,” Mian Riaz Hussain Pirzada, a member of the National Assembly’s standing committee on energy told Arab News on Saturday, regarding the hasty price surge.
Last week, in a letter to the government, the OCAC said the four public listed refineries in the country had incurred a combined loss of Rs47 billion for fiscal year 2018-19 and fiscal year July 2019-March 2020. It said oil market companies had suffered foreign exchange losses in the range of Rs40 to 50 billion in a little over two years.
The PM’s special assistant on petroleum said on Saturday the government was taking steps to make amendments in the law to ensure a smooth supply of the fuel across the country going forward.