Reduction in POL prices without IMF approval is a ‘reckless’ decision, says Miftah Ismail

Pakistan’s former finance minister Miftah Ismail has called the coalition government’s decision to maintain the petroleum development levy (PDL) this month unchanged “reckless”.

However, he maintained that what the earlier PTI administration did to the nation was “unforgivable.”

Shaukat Tarin, the leader of the PTI and a former finance minister, had tweeted about the PMLN’s -alleged doublespeak, to which Ismail responded.

“We were blamed for violating IMF conditions. According to Miftah sahib, they did not wait to get clearance from MD IMF before announcing the fuel prices. Clear doublespeak,” he tweeted.

Ismail replied that the PTI administration had in fact broken the terms of the IMF deal.

“You agreed to increase sales tax to 17 per cent but reduced it to zero. You agreed to raise petrol levy every month by Rs4 to Rs30 but brought it to zero. You agreed to not give amnesty but gave one anyway,” he said, in reference to the previous administration’s decision to temporarily freeze fuel prices.

Ismail argued that the subsidy was “unfounded and unsustainable” and that the PTI nearly put the nation into bankruptcy. He continued by saying that, while serving as finance minister, he had visited the IMF and prevented the nation’s default.

“Not increasing PDL this month without IMF approval is reckless, but what PTI did with our economy was unforgivable,” he insisted.

1. Shaukat bhai but you did violate the agreement you made with the IMF. You agreed to increase Sales Tax to 17% but reduced it to zero. You agreed to raise Petrol Levy every month by Rs 4 to Rs 30 but brought it to zero. You agreed to not give amnesty but gave one anyway. https://t.co/UfEe4JJfcS

— Miftah Ismail (@MiftahIsmail) October 2, 2022

Ismail brought up the fact that his administration had not sought IMF approval before freezing the petroleum charge for the second time in two days.

Ismail claimed that when Ahad Cheema, the establishment adviser to Prime Minister Shehbaz Sharif, requested him to contact the IMF managing director if gasoline prices could be held for three months, “I said that I would die but not ask this.” Ismail was speaking at an event in Karachi on Saturday.

“In any case … I asked the MD if we could freeze the tax for three months. The answer did not arrive and the government unilaterally did it. So may God have mercy.”

On Tuesday, September 27, Ismail resigned from his position as finance minister to make room for Ishaq Dar. Three days later, on Friday, the administration decided to lower petrol costs (Sept 30).

Petrol costs now cost Rs224.80 per litre, down from Rs237.43 previously. This reduction in price amounts to Rs12.63. High-speed diesel (HSD) is now available at Rs12.13 less per litre, at Rs235.30 instead of Rs247.43. Kerosene’s cost per litre dropped from Rs202.02 to Rs191.83 by Rs10.19. Light diesel oil (LDO) was reduced in price from Rs197.28 to Rs186.50 per litre by Rs10.78.

By lowering the petroleum development fee on gasoline by Rs5 per litre to Rs32.42, the government lost money. On HSD, the price was raised to Rs12.58 by an additional Rs5 per litre.

According to DAWN, the government currently charges Rs12.58 per litre PDL for HSD, Rs15 for kerosene, Rs10 for LDO, and Rs30 for High Octane Blending Component. Additionally, the cost of gasoline and HSD includes a Rs22 per litre customs fee.