ISLAMABAD, Pakistan (AP) - Pakistan's interim government raised fuel prices
about 7 percent Saturday, a decision likely to spark public anger at a time when
food prices are also rising.
The hike by the Pakistan Oil and Gas Regulatory Authority came as world oil
prices continue to hover at record highs. Light, sweet crude for April delivery
on the New York Mercantile Exchange traded at US$110.21 a barrel at market close
on Friday.
It was the second hike in state fuel prices in Pakistan in as many weeks.
Before March 1st, prices remained level for about 13 months.
A.R. Kamal, an independent economist, predicted that the fuel price increase
would cause inflation.
"The increase here was because of the increase in oil prices in the
international market. Definitely it will further inflation and cause a hike in
food prices," he said.
But Kamal also said the rise could help the new Pakistani government cut
deficits.
"The government's domestic borrowing exceeds 350 billion rupees
(US$5.7billion; euro3.7billion) out of which 150 billion (US$2.45billion;
euro1.57billion) went for the subsidy of oil prices," he said.
The price of gas rose 6.9 percent to 62.81 rupees (US$1.03; euro0.66) per
liter (0.26 gallons). Diesel rose 7.2 percent to a little over 40 rupees
(US$0.65; euro0.42) per liter (0.26 gallons).
The price hike by the interim government could save the incoming government,
led by slain former Prime Minister Benazir Bhutto's Pakistan People's Party,
from having to raise prices. The PPP is expected to form a government after
parliament convenes Monday.
The fuel price hike comes amid rising food prices, which rose about 14
percent in Pakistan in 2007. In Peshawar, the main city in the country's
northwest, the market price of a 20-kilo (45-pound) bag of flour has jumped from
about US$4.30 (euro2.85) to US$8 (euro5.3) in recent months.
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