The meeting was informed by Petroleum Secretary Ejaz Chaudhry that the prices of petroleum products were increasing because of a rise in international rates and another increase next week was ‘inevitable’. He said the international crude price was $110 per barrel on Jan 31 when the government increased prices by up to six per cent. Now it has increased to $121. - File photo

ISLAMABAD: Indicating that an increase of up to Rs3 per litre in petroleum prices was likely this month, the government resisted on Wednesday a demand from parliamentarians belonging to coalition partners and the opposition to consider a price reduction.

The highest functionaries from the ministries of petroleum and finance made an unusual appearance before a special committee of the National Assembly on oil prices and warned that any attempt to reduce prices would push inflation upwards.

Giving a presentation, the Oil and Gas Regulatory Authority (Ogra) said that on the basis of the trend in the international market the prices of petrol and high-speed diesel would increase by Rs2.68 and 94 paisa per litre on Feb 29.

It said the government had collected about Rs10 billion higher revenues through Petroleum Levy and General Sales Tax in the first seven months of the current financial year when compared with same period of last year.

The meeting was informed by Petroleum Secretary Ejaz Chaudhry that the prices of petroleum products were increasing because of a rise in international rates and another increase next week was ‘inevitable’. He said the international crude price was $110 per barrel on Jan 31 when the government increased prices by up to six per cent. Now it has increased to $121.

He said a substantial increase in prices could not be resisted and the committee should not insist on a reduction at this time.

Prime Minister’s Finance Adviser Dr Abdul Hafeez Shaikh said the revenue target from Petroleum Levy was Rs75 billion for the seven months, but Rs31 billion had been collected. As a result, the government has provided Rs45 billion subsidy.

He said the government should not take any decision that might increase inflation that had been brought down to a single-digit level. Reduction of prices would increase fiscal deficit that would translate into higher inflation, he said.

Therefore, he said, the parliamentary committee should not put pressure on the government for a decision that might attract public praise for a few days but make the people suffer through higher inflation for a longer period.

Dr Shaikh said domestic prices had been linked to the international rates under a formula approved by parliament. “The formula should not only remain automatic but sacrosanct and that should result in lowering of prices when international prices come down and vice versa.”

PML-N’s Rana Tanveer Hussain proposed that the GST rate should be fixed in absolute terms instead of 16 per cent that kept increasing with the prices.

He said the government should at least announce a ‘symbolic’ reduction in prices, otherwise, there would be no need for consulting the committee.

The committee decided to meet again during the current week.