FeaturedNationalVOLUME 18 ISSUE # 44

The double whammy of power and petrol price hokes

The caretaker government has dropped a horrendous ‘petrol bomb’ on the people of Pakistan. Last week, the finance ministry increased the prices of petrol and high-speed diesel (HSD) by Rs26.02 and Rs17.34 per litre, respectively, to over Rs330, thus breaching a psychological barrier that has been crossed for the first time in the country’s 70-yrear history.

The double whammy came on top of Rs32.41 and Rs38.49 per litre increase in petrol and HSD prices, respectively, in the last two fortnights since August 15. The combined increase now works out at Rs58.43 and Rs55.83 per litre within one month. The petrol shocker followed on the heels of over 27.4pc increase in the rate of inflation in August that would also have a lag effect on general prices in the country over the coming days and weeks.

It is important to note here that both petrol and diesel have become costlier by 20pc since the caretaker government took over. The official explanation is that owing to the increasing trend of petroleum prices in the international market, it has been decided to revise the existing consumer prices of petroleum products.

There has been universal condemnation of the unusual hike in petrol prices from all sections of society. Various bodies representing the business community have expressed concerns over the huge raise in the POL prices, terming it devastating for the public at large. They also demanded the government to immediately talk to the IMF and convince the lending agency to help Pakistan in providing relief to the harassed masses.

Business leaders have said that the massive hike in prices of petroleum products would further fuel the unprecedented inflation, intensify miseries for the common man and create serious issues for the industry due to the unbearably high cost of doing business. They have criticised the caretaker government that it should have kept the prices of petroleum unchanged due to the falling landing cost of imported crude on account of the persistent rise in the rupee strength against the dollar in the last eight interbank sessions despite rising crude oil prices in the world market.

FPCCI President Irfan Iqbal Sheikh, in a statement, said that the rupee closed at 296.85 for a dollar in interbank, reflecting more than Rs10 to a dollar gain which touched Rs307.10 on Sept 5. On the other hand, the Karachi Chamber of Commerce and Industry president said it has become almost impossible to run the industries at such a high cost. According to him, the latest petrol price hike is going to create a lot of problems for the already ailing economy as production has been curtailed by many industrial units to a great extent due to the rising cost of raw materials and energy.

Political parties too have criticised the caretaker government for the unprecedented rise in petrol prices, saying the move will put further burden on the masses already battling with rampant inflation and eroding purchasing power. According to the PTI, the price hike appeared to be “a conspiracy to inflame civil war in the country” as people have already lost their purchasing power due to ballooning inflation. A statement by the PTI spokesperson rejected the hike in prices and called it a cruel blow to the poverty-stricken masses. In this regard, Jamaat-i-Islami Ameer Sirajul Haq has been most vocal. While condemning the move, he claimed the government had increased the prices on the IMF’s instructions. He appealed to the people to take to the streets and become part of the protests launched by his party to force the government to take back the price hike. Sardar Abdul Rahim of the Grand Democratic Alliance (GDA) also rejected the increase in petroleum prices. Istehkam-i-Pakistan Party’s Secretary Dr Firdous Ashiq Awan, also condemned the price hike and called it unacceptable.

Because of the recent hefty rise in power tariff and the petrol bombshell Pakistan’s cost-of-living crisis has gone from bad to worse. The knock-on effect of the fuel price surge on the entire economy is a given fact. In recent months due to economic recession, wages have remained stagnant as many businesses have closed down or suspended production, resulting in lay-offs and higher unemployment.

Although the government claims that things are not as bad as reported in the media, for the average Pakistani, there is nothing but increasing pain on a daily basis. Many middle-class households have sunk to the level of lower classes as the rupee’s value plummets, while for the working masses, putting food on the table and providing the barest of necessities is now an uphill task.

Before the situation gets out of control, the government should formulate an economic recovery plan that emphasises the citizens’ welfare and financial well-being. The need is to devise an effective strategy to ensure immediate relief to the masses and the industry, who are no longer able to bear the brunt of consecutive hikes in the prices of daily essentials.