In Pakistan, petroleum prices were raised yet again to Rs248.74 per litre for petrol and Rs 276.54 for diesel. This is the fourth time petroleum prices have been raised in a period of 1-1.5 months under IMF guidelines or pressure.
Subsidies have been eliminated almost altogether, although there may be some residual subsidies that are to be adjusted. The agreement with the IMF requires full price recovery plus PLD taxation of Rs30-50 per litre and GST of 17%. This means more has yet to come.
While the elimination of subsidies may be a rational and reasonable IMF requirement, demanding PLD and GST in such an abrupt manner when international oil prices are extremely high, is rather ruthless and shows a high degree of insensitivity to the poor of this country.
While in USD terms, Pakistan prices may not be so high, in local rupee terms, the current prices are more than 100% of the usual prices and have increased rather abruptly. The wages of the poor, however, have not increased at all and cannot increase in tight economic circumstances.
The IMF can very well argue that it is Pakistan which has brought its economy to a level that it had to approach the Fund. And it is not the first time that Pakistan has gone to the IMF. This is the 16th or 17th time an IMF loan is being sought over the last 30 years or so. Successive governments in Pakistan have been pursuing an elite agenda, not collecting taxes and extending subsidies that benefit the rich and powerful.
The question the IMF must consider: how is any of this the fault of the poor? The poor in Pakistan should have resisted and revolted.
The fact is that Pakistan has no choice. It has to accept the IMF conditions or be ready to face default. The default may not be a good idea, although some nihilist but respectable economists have argued in favour of default rather than meeting the IMF conditions.
Let us come back to the petroleum pricing issue. One way of answering the price growth issue is to look at the prices in comparable countries or in the region. In India, the current average/typical gasoline prices are at Pak Rs277 per litre. Indian prices have always been higher than Pakistan, for which there is no apparent reason except for higher taxation in India.
Otherwise, the Indian petroleum industry is much larger and more efficient than Pakistan’s. India exports petroleum and is highly competitive, although not much is known here about India; financing military expenditure and cross-subsidizing exports could be some of the possible reasons. It should be noted that India is getting 30% cheaper crude oil from Russia. However, it may not be more than 10% of their current requirement. It is on the rise though by the day.
The lowest petroleum prices in the region are in Bangladesh. The Bangladesh government has started indicating that subsidies are becoming unsustainable. An oil price rise is expected there. In most countries, diesel prices have been kept lower than that of gasoline on the simple premise of public use of diesel in passenger transport and goods traffic.
In Pakistan, for one reason or the other, this logic has not been accepted. However, the current high diesel prices in Pakistan are due to high diesel prices. We have to put off this discussion for a later date when prices stabilize. It may be noted that in Sri Lanka, despite the widely known economic conditions and default, diesel prices are still lower than in Pakistan and elsewhere except in Bangladesh. Both Bangladesh and Srilanka have maintained quite low diesel prices. Export competitiveness appears to be the major driver in their energy pricing policies.
In the US, petroleum prices have been lower than elsewhere in the advanced countries due to the highly competitive oil industry and local abundance of oil production. American benchmark crude oil prices have always been lower than elsewhere. The US retail prices of petroleum products have always been considered benchmark prices.
This time, diesel prices are 10 per cent higher than gasoline in the US. This is due to higher market prices of diesel which are a result of demand, supply and other issues. Usually, diesel and gasoline prices are almost the same in the US as opposed to Europe and other advanced countries.
In such a bleak scenario, there are very few options and prospects for good. However, there is a possibility that the oil price may go down. It may take a year or so to stabilize around $90-95 as indicated by future contracts.
The rupee may get strengthened as has happened recently among the good news of the IMF’s agreement finalization process. The rupee may improve if all other financial sources follow IMF funding. The government may be able to pass on the savings to the consumers or use it to meet other deficits and subsidies.
There are some cost reduction opportunities as well, however small these may be: efficient buying, reduction of demurrage and other losses, and negotiating fair margins by the oil refineries and E&P companies.
An unfortunate aspect of Pakistan’s local crude oil pricing formula is that the wellhead prices are paid at international prices. There is no price advantage. As foreign oil producers are squeezing us, local ones are doing the same, even when it is public-sector companies. Similarly, oil refineries are making hay while the sun shines.
There is an S-curve ceiling and flour pricing formula in the case of local gas. Why is this not so for oil? It would protect both the producer and the consumer. Reportedly, there is a windfall profit formula which apparently has not been activated. Every penny is important in the energy business, as it is consumed in millions and billions of units; be it barrels, cubic feet, kWh or MMBtu.
Finally, how to protect the poor from such excruciating prices? We have been proposing for quite a while a low-price gasoline brand for motorcycles and smaller and older vehicles. This is a low–RON gasoline. Apart from being cheaper, it provides direct and targeted subsidies for the needy.
IMF supports targeted subsidies but opposes unintended benefits for high-income groups. The government of Pakistan has not yet been able to make a decision about this. Instead, it has announced a stipend of Rs2000. This has not yet been implemented or is not visible.
This was announced simultaneously with the increase of the first Rs30 increase. There is a need to suitably enhance this amount.
Energy conservation measures have been announced which may reduce consumption, although that does not directly affect prices. However, a reduction in consumption would reduce imports, reduce the current account deficit and affect the exchange rate in a positive manner. Reduced exchange rates would also reduce retail oil prices. The price raise itself may reduce demand. On the lighter side, all poisons have antidotes.
The writer is a former member of the Energy Planning Commission. Email: email@example.com.
Sham Idrees announces break in his marriage with Froggy
YouTube’s famous couple Sham Idrees and Froggy aka Sehar are taking sometime away from each other in their relationship.
Sham, taking it to his Instagram, left his fans in a shock after announcing his separation with Froggy. He wrote: “I would like to announce that me and froggy are taking sometime away from each other in our relationship. Please don’t involve me in issues concerning froggy, rabil or any of the other family members. I appreciate some privacy during this difficult time.”
Sham is a Canadian based YouTuber, who has a following of 1.4 million people on Instagram, is widely-known for his entertaining content. His videos often feature his wife Sehar along with him.
The couple tied the knot a few years ago and is parents to baby Sierra who is two-years old. The duo welcomed another daughter on September 28, 2022. They named her Shanaya Idrees.
After the birth of his first daughter, Sham Idrees also introduced his fans to his daughter Dua from his previous marriage.
Massive power breakdown hits Pakistan
- Minister says power generation units are temporarily shut in winter at night.
- Says frequency variation in national grid triggered outage.
- Says ministry trying to restore power in next 12 hours.
LAHORE/KARACHI/QUETTA/ISLAMABAD: A countrywide power breakdown, triggered by a “frequency variation” in the national grid early Monday morning, has left large parts of the country including Karachi, Lahore, Islamabad, Peshawar and Quetta without electricity.
Power Minister Khurrum Dastagir, while talking to Geo News, said that the power generation units are temporarily shut down in winter at night as an economic measure to save fuel costs.
“When the systems were turned on at 7:30am this morning one by one, frequency variation was reported in the southern part of the country between Jamshoro and Dadu. There was a fluctuation in voltage and power generating units were shut down one by one due to cascading impact. This is not a major crisis,” said the federal minister as the country plunged into darkness for the second time in four months.
The minister said that his ministry has started restoring some grid stations in Tarbela and Warsak.
“Peshawar Electric Supply Company (PESCO) and some grids of Islamabad Electric Supply Company (IESCO) have already been restored,” claimed the minister.
Talking about the breakdown in Karachi, the minister said that the matter in the port city is complicated as it has a complete electric supply system.
“We provide K-Electric about 1,000-1,100 megawatts routinely, however, it will be restored within a few hours. It is not certain how long will it take to sort this issue. However, my target is to restore electricity in the country in the next 12 hours,” said the minister.
Before the energy ministry’s announcement, different power distribution companies had confirmed the breakdown.
According to Quetta Electric Supply Company (QESCO), the two transmission lines have tripped leaving 22 districts of Balochistan, including Quetta without power.
Karachi power update
Meanwhile, K-Electric spokesperson Imran Rana said that at approximately 7:34am today, the national grid experienced a loss of frequency, affecting the power supply to multiple cities across Pakistan
“This has also cascaded to KE’s network affecting power supply to Karachi,” Rana said, adding the KE’s network is safe and protected.
“Our teams are actively monitoring the situation and enabling restoration efforts.”
An IESCO spokesperson said that its 117 grid stations were without electricity.
Meanwhile, PESCO also confirmed the outage in areas where it supplies electricity.
This is the second time within four months that a country was hit by a major power breakdown.
NEPRA takes notice
The National Electric Power Regulatory Authority (NEPRA), in a statement, said that it has taken “serious notice” of the power outage and directed the National Transmission & Despatch Company (NTDC) to submit a “detailed report”.
The statement also said that the regulator has previously imposed fines on similar outages in the 2021 and 2022. It also shared that NEPRA has consistently issued directives and recommendations on tackling such events in future.
In October of last year, Karachi, Hyderabad, Sukkur, Quetta, Multan, and Faisalabad were hit by a power outage.
At that time, the power minister said that nearly 8,000 megawatts of power went offline.
Back then, Dastagir had said that the simultaneous faults in two power lines, which had triggered the breakdown, at the same time was concerning for the government. He had also announced that an in-depth inquiry was ordered and promised action.
A timeline of power breakdowns in Pakistan
The country’s generation and distribution network has suffered eight major power breakdowns during the last nine years.
In 2014 and 2017, nationwide blackouts were caused by a fault in Tarbela Power Station while fog, frequency variation and the Guddu Power Plant fault were blamed for breakdowns in 2015, 2018, 2019, 2021, 2022 and 2023.
Every time the party in power announced to conduct a comprehensive probe and vowed to rectify the issues but nothing has happened despite multiple inquiries.
Punjab ordered to issue divorce certificates to non-Muslims
- Lahore High Court directs provincial authority to frame rules within 90 days.
- Petitioner says issue is faced by many members of Christian community.
- NADRA’s Registration Policy allows change of marital status on basis of affidavit.
The Lahore High Court (LHC) Wednesday directed the Punjab government to frame, within 90 days, rules under which union councils would issue divorce certificates to members of Christian and other non-Muslim communities in Pakistan.
In many parts of the country, the divorce certificates are not issued to non-Muslims by union councils that instead claimed such certificates were “not issued to the Christian community.” This is an issue for members of the said community because, without a divorce certificate, they cannot request the National Database and Registration Authority (NADRA) to update their marital status while applying for the renewal of their identity cards.
The matter was brought to the attention of the LHC during the case Shumaila Sharif vs the secretary union council etc.
The petitioner in her appeal requested that the court is a writ of Mandamus — an order from a court to an inferior government official ordering the government official to properly — against the relevant union council and direct it to issue her the divorce certificate.
The case proceedings
The petition was heard on December 16 last year and the presiding judge was Judge Tariq Saleem Sheikh.
During the proceedings, the counsel of the petitioner, Advocate Umar Saeed, said that the issue was faced by several people in the Christian community and was not a one-off incident.
Citing Section 33 (1)(j) of the Punjab Local Government Act 2022 (PLGA 2022) — which mandates that union councils ensure registration of births, deaths, marriages and divorces for all the communities without discrimination — and Article 36 of the Constitution, which expressly requires the state to protect the minorities’ legitimate rights and interests, the counsel argued that by refusing to issue the requisite certificate, the council was failing to fulfil its legal duty.
Additionally, Advocate Kashif Alexander, the court’s amicus curiae on the matter, contended that obtaining a divorce certificate is a legal right that cannot be denied.
Together the two emphasise that while the Constitution of Pakistan (1973) does not explicitly guarantee the right to identity, Article 9 (right to life) and Article 14 (dignity of man) safeguard that right. Therefore, any citizen whose marital status changes due to the dissolution of marriage by divorce has a fundamental right to obtain a divorce certificate from the competent authority and then have their CNIC updated/revised.
The Additional Advocate General has little to defend the respondents and said that the provincial government was taking steps to address the complaints of the Christian community regarding the non-issuance of divorce certificates.
During the proceedings, it was brought to the court’s attention that NADRA’s Registration Policy dated 06.04.2021 (Version 5.0.2) allowed a change of marital status of a divorcee on the basis of an affidavit in the prescribed form.
In light of this, the court directed that until the provincial government framed the requisite rules needed for the issuance of the divorce certificate by the union council, NADRA shall accommodate the Christian community in accordance with the Registration Policy 19.