Finance Minister Shaukat Tarin has said that the government cannot keep prices of petroleum products low artificially, stressing that the global hike in rates will have to be passed onto the consumers at some point.

Tarin's statement comes after the government abolished General Sales Tax (GST) on all petroleum products and reduced the rate of petroleum levy to absorb the international oil price rise with effect from February 1, 2022.

The estimated revenue loss on account of zero sales tax on petroleum products would be between Rs21 to 25 billion in one month, an official of Federal Board of Revenue (FBR) had told Business Recorder then.

With mid-month around the corner, a hike in the prices of petroleum products could be in the offing. The expectation is in tandem with oil prices internationally that have risen to over $90 a barrel. On Thursday, Brent crude futures rose 88 cents, or 1%, to $92.43 a barrel at 1325 GMT, while US West Texas Intermediate crude was at $90.71 a barrel, up $1.05, or 1.2%.

Tarin said the earlier decision cannot be persisted with in the longer run.

“We cannot keep petroleum prices low artificially," said Tarin while talking to a private TV channel. "If they are increasing, we would need to pass it on.

“Crude has jumped to $92 per barrel, which will bring pressure. We hope that the Ukraine tension eases, which will bring down international oil prices."

Meanwhile, apart from rising petrol rates, escalation between Russia and Ukraine would also affect Pakistan's agriculture sector as wheat prices will increase, said Tarin.

“By February 20, we would estimate our wheat stock, and if there is a shortage we would immediately go for booking,” he said.

Tarin said that despite facing a supercycle in commodity rates, Pakistan has been able to sustain economic growth, while trade deficit for January also declined by $1.5 billion.

“However, there is a lot of work needed to be done,” he added.

Pakistan’s trade deficit shrank 30% month-on-month to $3.36 billion in January, mainly led by lower imports amounting to $5.91 billion compared to $7.58 billion in December, the Pakistan Bureau of Statistics (PBS) said.