KUWAIT – Pakistan will not be able to afford subsidies on fuel this summer and much of the rising oil price burden will have to be shifted to the consumer, Water and Power Minister Naveed Qamar told Reuters.
“Pakistan has not yet recovered from the 2008 oil price rise and we have no planned subsidies for the summer months because we can’t afford it,” Qamar told Reuters in an interview on the sidelines of a ministerial meeting in Kuwait.
Pakistan imports about 80 percent of its oil and spent around $3.99 billion on the import of 6.9 million tonnes of petroleum products and $2.45 billion on 4.3 million tonnes of crude oil in the first seven months of the July 2010 to June 2011 financial year.
“Every time oil prices rise, this leads to instability in developing countries like Pakistan,” said Qamar. “And since the start of the year the government had tried to put subsidies on an on-and-off basis, but it’s really putting a strain on our economy,” he added.
Earlier this month, Pakistan raised fuel prices by up to 13 percent, which political parties were quick to criticise as fear built about the rising cost of living. The fragile coalition led by President Asif Ali Zardari halved the increase in petroleum.
“The subsidy issue is always a very sensitive one and causes a political stir,” said Qamar.
