The Ogra had worked out the difference in petroleum products prices in the world market during the last two weeks and recommended the government to pass on some fraction to the consumers. The Ministry of Petroleum and Natural Resources (MP&NR) and Ministry of Finance (MoF) had seconded the Ogra and sent the summary for the increase in petroleum products prices.
These two key government departments foresaw serious implications for the economy due to the policy of capping the petroleum products at unreasonable level. They have been time and again stressing the need of passing on at least some fraction of petroleum products.
The summary was sent to Prime Minister, Syed Yousuf Raza Gilani, as is the practice for a final decision. The Prime Minister rejected it outrightly with the comments that any upward revision in the oil prices will bring unbearable financial burden on the people. He also referred to the recent price hike which in his views was the outcome of last two upward revision in the oil prices.
His verdict will definitely give some relief to the people in the form of some stability in essential items rates, but its going to be a question mark for the government functionaries who criticised the last government for not passing on the factual international market prices to the consumers.
The rejection in increase of the oil prices seems a move for some political gain. By capping the prices at current level the government tried to give an impression to the people that it was Ishaq Dar of PML-N who raised the oil prices as Finance Minister and added to their miseries.
The government had raised the oil prices twice since March this year to offset growing budgetary deficit. By going back to the policy of capping the petroleum products prices, the government will now face bigger budget deficit. Will it work or simply add to the pressure on frail economy?