The Economic Coordination Committee (ECC) of the federal cabinet on Friday approved an increase Rs 9 per litre in the price of petrol for the month of May, a private TV channel reported.
The prime minister had earlier this week ordered the ECC to review a proposal by the Oil and Gas Regulatory Authority (OGRA) to raise petrol prices by over 14 percent.
In a summary moved to the Petroleum Division, the OGRA had proposed that the price of high speed diesel (HSD) be raised by Rs 4.89 per litre and petrol price be hiked by Rs 14.37 per litre for the month of May. The regulator had also requested an increase of Rs 7.46 per litre in prices of kerosene oil while a rise of Rs 6.40 per litre was recommended for the light diesel oil (LDO).
However, in a cabinet meeting on Tuesday, the government had decided to delay the decision and refer the matter to the ECC. According to reports, the prime minister had disagreed with the OGRA proposal to raise the petroleum prices, maintaining that the burden of increase in international prices of oil should not be transferred to the public.
In its meeting on Friday chaired by Advisor to Prime Minister on Finance Abdul Hafeez Shaikh, the ECC approved a Rs 9 per litre increase in the price of petrol, after reducing the GST on petrol by 5% to provide relief to the consumers. The reduction will entail a revenue loss of around Rs.5 billion to the government.
The meeting also approved the proposed increase in diesel price by Rs 4.89 per litre, light diesel by Rs 6.40 and kerosene by Rs 7.46 per litre.
Final approval of the increase in petroleum prices will be given by the prime minister. The increase, if approved by the prime minister, will take the per litre price of petrol to Rs 108.
Addressing an investment conference here in the federal capital, Shaikh said that controlling prices of petroleum products is not in the incumbent government’s hands. He said the budget for the fiscal year 2019-20 will focus on bringing about macroeconomic stability in the country, besides introducing measures for welfare of vulnerable segments of the society, as highlighted in the ruling party’s manifesto. He said the budget will comprise measures to address issues of fiscal and monetary policies for promoting sustainable growth. He said the government is committed to fiscal discipline, improving macroeconomic policies and engaging with the rest of the world.
The advisor acknowledged that inflation is an issue the government is worried about, however added that it is not in the hands of the government to control the prices of oil and other things that are internationally determined. “So what we need to do is to figure out a combination of monetary and fiscal policies to curtail aggregate demand to reduce imports particularly of luxury items, make them harder to import and minimize the impact on the lives of ordinary people because this hurts public and it hurts everybody,” he remarked.
On negotiations with the International Monetary Fund (IMF), the advisor said that the fund exists as an international institution helping economies that face macroeconomic imbalances. He said that the government is in negotiations with the fund and obviously it will ensure that a reasonable programme is reached which will create a platform for sustainable macroeconomic stability. The programme will also ensure enhancing relationship with international players such World Bank, Asian Development Bank, Islamic Development Bank and country’s bilateral friends and so on, he added.