LAST Friday was a bombshell by any definition and a Rs55 per litre price hike is a killer for the common citizenry. Sharp adjustments like this always trigger equally sharp politics. But this is the first time I have seen a government move with such speed, and pre-emptive intention, to adjust oil prices at the pump even before the instability has entered our oil supply chain.

Maybe it was possible to do this better, but the fact that a sharp upward adjustment was coming was unavoidable. In the wake of the price hike, a number of observations circulated. Let me address one of them in particular.

People shared a graphic showing fuel price hikes in various countries around the world which showed Pakistan at the top. Why did Pakistan pass such a massive price increase compared to all other countries, including India, Bangladesh and Sri Lanka?

Let’s start with the regional countries. India has elections coming up in four important states in the month of May and a history of governments being reticent about adjusting fuel prices in the run-up to elections. Second, India has a strategic reserve of oil, which when combined with the commercial stocks held by oil marketing companies, gives them 74 days of import cover. By contrast, Pakistan has stocks barely enough for 28 days of cover, and no strategic reserve to cushion the impact of supply disruptions. According to reports from India, the oil sector is currently bearing a loss of INR20 per litre (Rs60) on every sale.

Pakistan........

© Dawn