Oil prices raised to protect ADP budget: Ashfaq

The increase in the oil prices had become imminent in order to save the budget of Annual Development Programme of FY 2004-05, as there were no more funds with the government to provide subsidy to the consumers. The spokesman of finance ministry, Dr Ashfaq Hassan Khan stated this while talking to Business Recorder here on Saturday. In an exclusive interview, Dr Ashfaq said that during the past seven months the government has suffered budgetary hit of Rs 40 billion on providing oil subsidy, hoping that the prices in the international market would come down to about $30 per barrel.
But, he added, it has now been established that the oil prices will remain around $50 per barrel, therefore the government was compelled to pass on some of the increase to the consumers.
The finance ministry spokesman said that the government had levied Rs 48 billion as the Petroleum Development Surcharge in the current year budget and collected Rs 24 billion out of which Rs 20 billion were spent on providing oil subsidy. In addition to that the government is to pay Rs 12 billion to the national oil companies because of oil price hike, otherwise, they would not be in a position to carry on their normal operations.
He clarified that the government would still provide subsidy of around Rs 20 billion till June 30, 2005, to the consumers out of the petroleum development surcharge. Dr Ashfaq Hassan said that the oil prices have been increased only to the extent that the government had not to pay from its kitty to the local oil companies.
The spokesman said the oil prices in Pakistan are still Rs 10 per litre lower than India as the Indian government immediately passed on the increase to the consumers when the oil prices rose from $30 per barrel level.
Dr Ashfaq admitted that some financial experts and media men were rightly critical of the government's earlier decision not to pass on the price hike to the consumer six months ago as was done by the rest of the world in view of unlikelihood of price decrease.
He recalled that there were two options before the government; either to continue freeze of oil prices and cut down its development budget to provide subsidy or pass on some increase to the consumer as a bitter pill.
The finance ministry spokesman said that the government took the decision to moderately increase the oil prices reluctantly but in the best interest of the nation, otherwise, allocations for education and health sectors would have been eaten up by the subsidy.