ISLAMABAD – After raising the price of oil to the highest level in the country’s history (Rs 127.3 per liter), the federal government said on Friday that oil prices were still the lowest in Pakistan compared to those of other countries in the region.

“Prices on the international market have recently increased, forcing the government to raise local prices,” Federal Minister of Finance and Revenue Shaukat Tarin said at a press conference with Minister of State for Information and to Farrukh Habib Broadcasting here.

He informed the media that the government had not fully passed on the impact of rising international oil prices to the masses. “We passed the minimum price increase on to consumers.” The government has absorbed the pressure of rising prices on the international market by bearing the burden of Rs2 billion. He said the rise in global oil prices caused by Covid-19 had also had an impact on Pakistan.

Pakistan is in 17th place in terms of oil prices in the world, and countries where prices are lower than in Pakistan produce oil themselves, he added. He said gasoline is sold at Rs 127 per liter in Pakistan while its price in India was Rs 235 per liter and Rs 195 per liter in Bangladesh.

He informed that the government had planned to generate 600 billion rupees from the petroleum tax during the current fiscal year. However, Prime Minister Imran Khan had ordered to provide maximum relief to people regarding oil prices, resulting in less oil tax collection. He said the government reduced the petroleum development tax from Rs 30 in 2018 to just Rs 2.5 per liter.

The government faces severe criticism from the public, business circles and opposition parties after increasing almost all petroleum products on Thursday. The government has increased gasoline by Rs 4 per liter, high speed diesel (HSD) by Rs 2 per liter, kerosene by Rs 7.05 per liter and light diesel (LDO) by Rs 8.82 per liter for the first half of October.

The Minister of Finance once again blamed the international market responsible for the increase in the rate of inflation in the country. The whole world has witnessed food inflation due to Covid-19, and being an importer of food, Pakistan has also had to deal with this impact. The agricultural sector has been neglected over the past 30 years by various governments. He explained that the government had decided to reduce the prices of flour to Rs 1,100 per 20 kg bag, ghee and oil prices to Rs 50 per kg and to set the price of sugar at Rs 90 per kg in the country. Meanwhile, the government would provide direct cash grants to 12.5 million families, which would cover 40 to 44 percent of the country’s population.

He said agriculture is also focusing on producing food locally to meet demand.

Shaukat Tarin said the Pakistani economy is growing as the tax collection target is exceeded by Rs 185-190 billion in the first quarter (July to September) of the current fiscal year and imports increase. Tax collection shows growth of 38 to 40 percent. He was optimistic that the government would meet the annual tax collection target.

The finance minister said the government would launch the Kamyab Pakistan program soon after responding to concerns from the International Monetary Fund (IMF) and the World Bank. Under the Kamyab Pakistan program, the government would provide loans to the agriculture, industry and housing sectors in addition to providing health cards and technical training to young people. He said Prime Minister Imran Khan wanted to make Pakistan a state like Riyasat-e-Madina.

He admitted that the loan is increasing due to the depreciation of the currency. However, the debt-to-GDP ratio fell by 4% in the last fiscal year. Speaking about the IMF program, he said the government was submitting a grand comprehensive plan to the IMF. “I hope we will be heard at the IMF. We will have discussions on revenues and the electricity sector.

Noting that revenue collection has increased by up to 40%, he admitted that there are challenges in the electricity sector. “Raising electricity tariffs is not the solution,” he said.

Farrukh Habib said provincial governments are also responsible for controlling the prices of commodities. He said the government of Punjab is working well in this regard. He said that the prices of wheat and flour in Sindh are higher than in Punjab. He said the government is working on food security.

He added that ten dams are being built that will add affordable energy to the national grid. He said the government is working to ensure that the minimum impact of international prices is passed on to the people. He said the sales tax and petroleum tax have been gradually reduced to ease the burden on consumers.

Meanwhile, Finance and Revenue Minister Shaukat Tarin said on Friday that Saudi Arabia had agreed to provide US $ 3.6 billion for the purchase of crude oil. Saudi Arabia would pay the Pakistani government $ 3.6 billion on a monthly basis over a two-year period, Shaukat Tarin said in a media interview in Jhelum.

He said the Pakistani government would receive $ 150 million per month which would only be used for the purchase of oil.