Economic Concerns Rise as Oil and Gas Prices Increase

Mian Zahid Hussain, representing various business forums including the National Business Group Pakistan, has expressed serious concerns over the recent surge in oil and gas prices, highlighting the increased difficulties faced by both the general public and the business sector.

He cautioned that the imposition of new taxes in the budget, coupled with escalating energy costs, could have severe consequences for Pakistan’s economic stability and the well-being of its citizens.

Mian Zahid Hussain pointed out that despite the relative stability observed in global crude markets following the recent tensions between Iran and Israel, the considerable rise in domestic fuel prices is alarming. He suggested that the government is using energy prices as an easy target for revenue generation by increasing the petroleum levy.

He contended that this strategy is particularly flawed given the decrease in international crude prices from $85 per barrel the previous month to approximately $65 currently. Providing expensive fuel is a misguided approach, as it is expected to exacerbate inflation, drive up production expenses, and negatively impact both industry and household budgets.

Mian Zahid emphasised that the petroleum levy increase aligns with directives from the IMF. Instead of addressing issues such as gas theft and line losses, the government is transferring the financial strain to industrial, commercial, and residential consumers. He cautioned that while this approach may yield immediate revenue, it is likely to impede long-term economic progress.

Across the globe, governments are implementing energy subsidies or maintaining stable pricing to manage inflation and stimulate industrial growth. In contrast, Pakistan is experiencing simultaneous increases in the costs of essential goods, production, and transportation, intensifying economic pressures.

He mentioned that India has maintained stable oil prices for over a year, while Bangladesh has implemented multiple reductions in the prices of petrol, diesel, high-octane fuel, and kerosene.

Mian Zahid argued that instead of raising energy prices, immediate and comprehensive reforms are essential. Circular debt has exceeded Rs 2.7 trillion, electricity theft is above 17 per cent, and line losses are significantly higher than regional averages. Without resolving these underlying issues, price increases will only provide temporary relief while potentially encouraging further theft and non-payment.

He urged the government to align its decisions with global trends, consumer affordability, and the challenges faced by industries. Relying on energy price hikes solely to decrease the fiscal deficit could lead to increased poverty, unemployment, and business closures. He appealed to the government to adopt transparency, consultation, and a pragmatic approach in its policymaking.