New Delhi: Pakistan’s Petroleum Minister Ali Pervaiz Malik has underscored the stark contrast between his country’s worsening fuel problem and India’s relatively stable position. He pointed out that New Delhi was better placed to cushion the impact of rising global prices amid the Iran war because of its strong policy measures and supply strategies.
What did the Pakistan minister say
Speaking to a local news channel, Malik said that India has strategic oil reserves and adequate forex reserves to absorb the impact while Pakistan is reeling under stringent bailout conditions imposed by International Monetary Fund (IMF).
The minister reportedly said: “India doesn’t just have 600 arab dollars worth of reserves but they also maintain strategic reserves. This helps them cushion this crisis. Besides, they are not part of IMF programme and they tried to insulate themselves by reducing taxation as oil prices soared … they had the fiscal space to do that.”
He said that Pakistan had to engage in intense backchannel talks with IMF to secure relief for the people from the zooming oil prices.
The minister pointed out that during the budget, Pakistan decided with IMF and other donor agencies that “we will charge levy on diesel and petrol to check our losses”. He reportedly added: “Now, with diesel prices rising up to 3-4 times, we decided to reduce the levy to zero on diesel and shift the entire burden to petrol while protecting motorcyclists by giving them targeted subsidy. However, had we broken our commitment with IMF and increased our losses, the consequences would have been worse. We conducted backchannel negotiations with IMF and convinced them to reduce levy by Rs 80 per litre.”
Earlier, Pakistan had reduced petrol prices by Rs 80 a liter to Rs 378 with Prime Minister Shehbaz Sharif stating that the cuts will come from the government’s petroleum levy. The reduction followed a government decision a day earlier to increase diesel and petrol prices, citing growing global oil rates.
How India handled the crisis
In India, petrol and diesel prices have remained relatively stable. The government had earlier slashed central excise duties on petrol and diesel by around Rs 10 per litre each, effectively subsidising oil marketing companies that were incurring losses due to zooming fuel prices.
India also depended on its huge foreign-exchange reserves, diversified crude-import sources and harnessed existing strategic petroleum reserves and fuel-tax tools to ward away the immediate macroeconomic and impact of the oil shock.
In a separate interview, Malik had said: “We don’t have any strategic oil reserves … we only have commercial reserves. We have crude worth five to seven days. And the refined product with OMCs can only last 20-21 days. We are not like India which has 60-70 days of reserves and can release it with just a single signature.”
He pointed out that Pakistan doesn’t have even a day’s worth of strategic petroleum reserves, which leaves its energy system extremely vulnerable to external shocks.