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Pak under Rs 60 bn burden as Shehbaz Sharif rejects proposal for fuel hike

Pakistan Prime Minister Shehbaz Sharif has put an additional burden of around Rs 30 billion on the exchequer by turning down the oil and gas authority's proposal to increase the fuel prices

Pakistan  | Shehbaz Sharif | Economic Crisis


Pakistan’s opposition leader Shahbaz Sharif smiles during a press conference, in Islamabad on March 30, 2022. Lawmakers appeared poised to push Prime Minister Imran Khan out of power in an upcoming no-confidence vote (AP/PTI Photo)
Pak PM Shehbaz Sharif

Prime Minister has put an additional burden of around Rs 30 billion on the exchequer by turning down the oil and gas authority's proposal to increase the fuel prices thus further deteriorating the economic situation of the country.

An amount of Rs30 billion is already due on account of price differential claims due to keeping oil prices unchanged from April 1, 2022.

The government will be paying a price of Rs60 billion to oil companies due to maintaining existing oil prices for the month of April.

The Oil and Gas Regulatory in a bid to provide relief to the country's crippled economy proposed Sharif to beef up the fuel price however the premier refused to accept the offer which led to a devastating effect. PM's decline will now torment the government exchequer with an additional burden of around Rs30 billion.

Oil and Gas Regulatory Authority (OGRA) had proposed an increase in the price of diesel by Rs 51.32 per litre (35.7 pc), petrol by Rs 21.30 per litre (14.2 pc), kerosene oil by Rs 36.03 per litre (28.7 pc) and light diesel oil (LDO) Rs 38.89 per litre (39.9 pc), reported The Express Tribune.

The circular debt situation in oil and gas sectors had already been worsening and the accumulation of subsidy or price differential claims would lead to an increase in circular debt in the coming days.

Following the prime minister's decision to not increase the fuel prices, the government would have to pay this amount to oil firms on account of price differential claims (PDCs).

Sharif also allowed the power distribution companies to charge more from the power consumers thus further burdening the people of the country who are suffering from tax increases, and higher energy prices.

Amid the rising inflation in Pakistan, people will have to pay an additional cost of Rupees 4.8 per unit for the electricity they consumed since February.

According to The Express Tribune, the National Electric Power Regulatory Authority (Nepra) jacked up the power tariff by Rs 4.8 per unit on account of fuel cost adjustment (FCA) for the month of February.

Power Distribution Companies (DISCOS) will charge fuel cost adjustment (FCA) of February 2022 in the billing month of April 2022 to all consumer categories.

Central Power Purchasing Agency (CPPA-G) had requested the power regulator to allow an increase of Rs4.9441 per unit to burden the power consumers with an impact of Rs38.4 billion.

NEPRA conducted a public hearing on March 31 however, it approved the increase of Rs 4.8530 per unit instead of Rs4.9441 per unit to put an additional burden of around Rs 37.7 billion on power consumers, as per the news paper.

Areas of Karachi include Korangi, Landhi, Railway Colony, Nusrat Bhutto Colony, Khawaja Ajmair Nagri, Paposh Nagar, Liaquat Market, Malir, Gulistan-e-Jauhar Block-2, Korangi Sector 30, 31 and others, reported ARY News.

As the outage issues in Pakistan's major city continues, the prime minister was informed that nine independent power producers (IPPs) had been closed due to non-supply of gas, RLNG and coal, while 18 power plants were not working due to technical reasons.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Sat, April 16 2022. 08:30 IST