ISLAMABAD – The political parties in the opposition on Thursday refused to allow the government’s planned increase of 13 percent in petroleum prices from February 1 and recommended that the burgeoning fiscal deficit be curtailed with better financial management.
According to a source, the Ministry of Petroleum had informed the committee that they were compelled to increase the petrol price by 13 percent to Rs 9.43 per litre and diesel price by 12 percent to Rs 9.20 per litre from February 1, due to the surge in petroleum prices in international markets.
The ministry said that if the petroleum prices were maintained the fiscal deficit would increase by Rs 30 billion in the second half of this fiscal year. Finance Secretary Dr Waqar Masood Khan called the power sector subsidies a killer of the economy and said that if prices were not increased the government would have no option but to print notes, that would increase the inflation.
However, the committee countered his argument by saying that they would not allow any increase in petroleum prices and the government should look for other options and improve its financial management. They suggested elimination of deemed duty on oil refineries, which the finance secretary said would be abolished the day circular debt finished.
Petroleum Minister Naveed Qamar also assured the committee that the deemed duty on High Speed Diesel could be eliminated provided the financial health of local refineries improved. The opposition demanded the government abolish the levy on petroleum products because it wasn’t justified when there was 17 percent General Sales Tax on petroleum products.
The government agreed to the proposal to eliminate IFEM on petroleum products, a source said. The committee will meet again on Monday.
