Oil prices are not going to go down in the wake of the drop in international market, said the Minister of State for Information & Broadcasting, Tariq Azeem, at a press briefing here on Friday. He said that despite reduction in global oil prices, the government was still offering subsidiy.
The prices of petroleum had been continuously rising since May 2004 for which the government had to delink itself from international market price and moved towards the policy of subsidy for relief to the common man. He said that the government has so far borne Rs 83 billion loss on account of subsidy. "So, there is no point in tying the oil price with international drop," he added.
The subsidy, in the shape of Petroleum Development Levy (PDL) and Price Difference Claim (PDC), contributes for Rs 35 billion and Rs 48 billion, respectively. Adviser, Ministry of Finance, Dr Ashfaq Hassan Khan and Secretary Ministry of Petroleum Ahmad Waqar were also present at the press conference.
Tariq said that during the high price rise period of 38 months, from May 2004 to October 2006, the government had to freeze oil prices to keep them affordable to people except for incremental increase on eight occasions to relieve some financial pressure, which was becoming unbearable.
He said that the government has already paid Rs 28 billion under the head of PDC to various companies. An amount of Rs 20 billion is still payable, out of which Rs 7.5 billion is for the current financial year. If the oil prices remained at the current level it would take about three months before the outstanding amount is adjusted, he added.
The minister said that the government was focusing on agriculture sector, transport and households and wants to maintain the prices of diesel, kerosene, and light diesel oil at constant levels for the wellbeing of low-income groups, while the price of petrol is kept at par with international market, which does not hit the low-income groups.
Dr Ashfaq said that the government delinked itself from the open market when the prices of oil crossed $40/barrel in 2004 and followed the 'subsidy strategy' not to pass the burden to the public.
Giving comparison of 1998-99, the minister said that when oil prices were low at approximately $10, the then government nevertheless collected Rs 67 billion in Petroleum Development Levy, whereas the present government collected Rs 6 billion against a budgeted figure of Rs 47 billion in 2004-05. Prices of petrol and diesel are on average 16 percent and 22 percent cheaper than India, he added.
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