Pakistan raises oil prices, fueling anger

[March 01, 2011]  ISLAMABAD (AP) -- Pakistan hiked oil prices by 9.9 percent Tuesday, a move that threatens the stability of the fragile, U.S.-allied civilian government at a time of economic turmoil in the impoverished country.

Spikes in international oil market prices -- spurred by uprisings in Libya and other parts of North Africa and the Middle East -- forced the raise in Pakistani prices, said Jawad Nasim, a spokesman for the country's oil regulator. The price of a liter (0.26 gallon) of petrol went from 72.96 rupees (85 cents) to 80.19 rupees (94 cents).

Opposition parties and even some members of Pakistan's governing coalition immediately denounced the raise, while a group representing public transportation workers in the country's largest city threatened to go on strike.

Haider Abbas Rizvi, a senior member of the Muttahida Qaumi Movement, said the price increase was unacceptable because it would further burden Pakistan citizens, who are already struggling to deal with double-digit inflation and chronic power shortages.

The MQM briefly left the governing coalition in January when the government tried to raise fuel prices, and Rizvi hinted that the party may once again defect to the opposition unless the ruling Pakistan People's Party reverses its decision in three days.

The ruling party backed off on that earlier increase to keep the MQM onboard and save its majority in parliament, upsetting the United States and international lenders whose billions are keeping Pakistan's economy afloat. The U.S. in particular has an interest in seeing Pakistan stay economically and politically stable because it relies on the country's cooperation to further its war aims in Afghanistan.

It was not immediately clear if the People's Party could afford to avoid another price hike this time.

Mohammad Sohail, an economic analyst, estimated the government had lost out on 17 billion rupees ($200 million) by failing to increase gasoline prices since November. Even the 9.9. percent increase on gasoline and other petroleum products wasn't enough to cover losses, he said.

Karachi Transport Union, an association of bus owners, truckers, taxi drivers and others involved in the city's public transport said its members would go on strike on Thursday over the price hike.

Syed Mahmood Afridi, secretary-general of the group, said the strike would last until the government reversed decision.

Karachi is the country's most populous city, with over 16 million people, and its main economic hub. A lengthy public strike there could further hobble the Pakistani industry.

Pakistan has a population of more than 180 million. Average income per capita is less than $3,000, so a rise in petroleum prices can make a big dent in a citizen's pocketbook.

The International Monetary Fund has provided Pakistan with more than $7 billion in loans to salvage its economy, but it has demanded the government take at times difficult steps to reform its economy.

But the economic reforms, notably a revised general sales tax, are unpopular. The ruling party has tried to pursue a policy of "reconciliation" in hopes of getting all parties onboard for economic changes, but it has had little luck so far, and its political opponents seem to sense its weakness.

Last week, the Pakistan Muslim League-N pushed the People's Party out of its coalition in Punjab, the country's most populous and wealthiest province. The PML-N is in charge of the government in the province but in the opposition on the federal level.

Officials with the People's Party could not immediately be reached Tuesday.

Also Tuesday, the bullet-riddled bodies of four tribesmen slain by suspected Taliban fighters for allegedly acting as U.S. spies were found in a northwest Pakistani tribal region, Pakistani intelligence officials and a resident said.

The bodies were found along a road near the Hamzani area of North Waziristan, a tribal region largely under the control of militant groups engaged in fighting U.S. and NATO forces across the border in Afghanistan. A note attached to the bodies accused them of acting as U.S. spies.

Local tribesman Syed Khan said he'd seen the bodies early Tuesday along a road near his home. Two intelligence officials confirmed the account on condition of anonymity because they were not authorized to speak to reporters on the record.

Taliban fighters have slain numerous tribesmen in North Waziristan whom they suspected of spying for the U.S., including passing along information that helps American missile strikes against militant targets.

[Associated Press; By ZARAR KHAN]

Associated Press writers Rasool Dawar in Peshawar and Ashraf Khan in Karachi contributed to this report.

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