Petrol and diesel are a critically important resource for Pakistan’s economy and daily life. According to the Pakistan Bureau of Statistics, in 2020, Pakistan imported approximately 9.95 million metric tons of petroleum products, including petrol and diesel because Pakistan’s domestic production of petroleum products, including crude oil refining and natural gas processing, is not sufficient to meet its domestic demand of different industries such as agriculture industry, transportation industry and electricity generation .therefore to curb the increasing demand of petrol and diesel Pakistan has to rely heavily on imports from countries like Kuwait and Saudi Arabia which makes Pakistan highly vulnerable to fluctuations in global oil prices.
Overview of Pakistan’s petrol prices within 2023
Since Pakistan has always imported petrol and diesel from other countries thus it has always been subjected to increase and decrease in petrol prices. However, in recent years especially since the end of 2022 Pakistan has seen major petrol price hikes due to Pakistan deteriorating economic crises and devaluation of Pakistan’s currency against Us dollar.
During the tenure of Imran Khan, the former prime minister of Pakistan took the people of Pakistan by surprise when he announced a big drop in petrol prices by approximately 10 %
after ousting the former government of Imran Khan, the coalition government of PML-N continued the petrol subsidy for some time and then eventually ending it on 15th/16th June 2022 this came after Pakistan and IMF’s negotiations on the resumption of the bailout program, in which The IMF stressed on cutting the unfunded subsidies which were costing the cash-strapped country billions per month.
Following this then finance Minister, mister Miftah Ismail added that petrol and diesel prices have been increased by 17%, an increase of 30rupees per liter increasing the petrol and diesel prices to 209.86 and 204.15 respectively and since then petrol prices have only been going up.
Just like 2022, 2023 too started with a price hike bomb when the finance minister of Pakistan, Ishaq Dar increased the prices of petrol and diesel by 35 rupees as a result the new prices were 249.80 rupees diesel 262.8.
As of now, the government has cut down the price of petrol by 5 rupees however the price of diesel remains the same thus not the price of petrol is 267 whereas the price of diesel will remain the same that is 280 Rs. This was done to pass on the global drop in oil prices to the customers.
While consumers are relieved by the drop in petrol prices, diesel prices remain unchanged, disappointing the country’s oil sector, which hoped for a price reduction of over Rs20 per liter due to the falling international price of diesel.
While this temporary reduction in fuel prices will provide some relief to people but looking at the condition of our economy the government might drop another fuel price hike bomb sooner or later which will send shockwaves across the crippled economy far beyond petrol stations.
How have these petrol prices affected daily life and things within Pakistan?
Pakistanis are concerned that the massive fuel hike will affect not only their wallets but will also shut down more factories as the cost of doing business has significantly increased, increase unemployment, and affect their homes negatively. And affect the overall economic growth of Pakistan
Moreover increased petrol and diesel prices will overall export products expensive as well because which will make our goods less competitive within the global market affecting our net exports. Moreover, increased prices of fuel will also make Pakistan an unattractive spot for businesses.
According to experts, inflation readings will reach multi-decade highs of around 30% in the months ahead, up from a 49-year high of 27.3% in August 2022. Not only this Compared to the 6% expansionary growth of the previous fiscal year 2022, but Pakistan’s economic growth is projected to be negative 1% in the fiscal year 2023.
The hike in petrol and diesel prices will initially shock businesses and households, according to Pakistan Business Council CEO Ehsan Malik. In time, however, the decision would gradually reverse negative developments into positive ones.
Increasing petroleum prices, he said, would raise everyone’s transportation costs. The impact on supply chain management of goods and people will be negative, with multiplier effects on the economy…inflation will increase dramatically.”
Moreover Khurram Shehzad, CEO of Alpha Beta Core (ABC), said, “Inflation will skyrocket starting with petroleum prices increasing by Rs35 per liter.”
In addition, gas and electricity will be taxed by 75% and 25%, while untaxed real estate, retail, and low-taxed agriculture will be taxed. As a result of increased taxes and high-interest rates, documented businesses are going to be squeezed more in the near future, resulting in more layoffs and unemployment.
