If Pakistan didn't import diesel in July, then why massive hike in its price?
Business
Expensive POL products mean higher transportation, agri input cost
LAHORE (Web Desk) – The government increased the high-speed diesel price for consumers after the last two fortnightly reviews by Rs19.90 and Rs20 per litre respectively, citing the rising prices in international markets.
However, there are reports that Pakistan didn’t import high-speed diesel in July due to enough stocks, which begs the question: Why people are forced to pay more when the country already had the required inventories?
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Meanwhile, the issue gets more complicated given these reports also suggest that Pakistan may also not import the fuel neither in August nor September.
So not only the last two price hikes in the case of diesel – a fuel on which Pakistan’s transport and agriculture sectors are heavily dependent – become incomprehensible but also those which may be in the offing in near future too.
In this scenario, the massive hike of Rs39,90 in two instalments can only be attributed to three possibilities.
Firstly, the increase in Petroleum Development Levy (PDL). But the price is massive that means the move can’t be solely attributed to the Rs60 PDL as suggested by the International Monetary Fund (IMF).
Secondly, it is due to government’s inability to enhance revenue collection through direct taxation as it decided – in a desperate move to please the IMF after signing the $3 billion deal – to shift the entire burden to the masses.
Thirdly, it is a combination of the two abovementioned reasons. Even this logic doesn’t fix the puzzle of Rs39.90 increase in the diesel price, meaning if the government has imposed the PDL as per the IMF conditions then why the extra hike in its retail rate.
Hence, the historic high-speed diesel price you are paying is only to the government’s rushing to boost its finances by making the fuel even more expensive for the ordinary people instead taxing the rich and withdrawing the subsidies given to the elite. The simple formula again at work.
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Unfortunately, the government again fuelled inflation instead of easing it as the move has pushed the transportation cost as well as the production cost for agriculture further up, resulting in hike in not only food prices but also every other commodity.
In short, it is an inflationary measure and no one needs a degree from a foreign university to understand that.
Meanwhile, the decision not to import high-speed diesel is due to the reduced demand thanks to economic slowdown and smuggling from Iran as its daily consumption from the legal channel had fallen to 15,000 tonnes from 22,000 tonnes in the past.
