Despite reducing petrol prices, the government is still meeting its obligations for the Levy on petroleum prices. It is possible for the government of Pakistan to reduce the price of petroleum products, even if it is facing financial difficulties. Same way Imran did by doing it for Rs 150 Per Litre just before he was ousted. Also, Shahbaz Sharif laid the foundation of the Sukkur-Hyderabad motorway worth Rs.300B just the day before yesterday. So the kitty may not be completely empty.
One way the current Government could do this is by subsidizing the cost of these products. This means that the government would pay a portion of the cost of the products, effectively reducing the price for consumers. The government could also choose to reduce the taxes on petroleum products, which would also lower the price for consumers.
Another option for the government could be to negotiate lower prices with suppliers, either by securing a better deal through negotiations or by finding alternative suppliers. The government could also consider increasing efficiency and reducing costs in its own operations, such as by streamlining processes or adopting more cost-effective technologies.
It’s worth noting that reducing the price of petroleum products can have both positive and negative effects on the economy. On the one hand, lower prices can provide relief to consumers and businesses, which can stimulate economic activity. On the other hand, if the government is subsidizing the cost of these products, it could put a strain on the government’s budget and potentially lead to other financial problems.
Petrol prices in Pakistan are currently more than 1.5 times higher than they were at this time last year. Even though the cost of purchasing petrol has decreased in the international market, the government of Pakistan is able to maintain its revenue from the petroleum levy because it can reduce the price of petrol without changing the levy. As a result, the government is able to afford this change. Do not forget it is the same government that plans to distribute 100,000 laptops unable to pay for a consignment of lentils at the port.
It is not the government that buys and sells petroleum, but rather various companies. If the government does not reduce the price, it will benefit the petroleum companies. The government only adds a petroleum levy as part of its commitment to the International Monetary Fund (IMF).
Related: How Petrol Prices Are Set?
No oil and gas reservoirs were discovered in the offshore drilling at Kekra
Both success and failure are normal parts of mineral exploration operations. It was disappointing that $100 million had been wasted on the offshore drilling at Kekra, where a joint venture of four oil exploration companies (ExxonMobil, ENI, Oil, and Gas Development Company, and Pakistan Petroleum Limited) failed to find oil and gas reserves after four months of drilling. While it was understandable to be disappointed by the outcome of this project, it was important to recognize that success and failure are a normal part of mineral exploration operations. In fact, the global success rate for such projects is generally between 30% and 40%. It was also worth noting that India found oil reserves on its 43rd attempt at an offshore well, Saudi Arabia found its first oil reserve on its 7th attempt, and Norway drilled 78 holes before hitting it big. The cost of extracting oil can vary significantly, with the cheapest being Saudi oil at under $10 per barrel and the most expensive being Russian oil at over $60 per barrel. Ultimately, it was important to keep in mind that it may not always be financially or environmentally beneficial to extract oil, and it was important to consider alternative energy sources.
