Tuesday Jun 14, 2022
KARACHI: Diesel and petrol prices could rise by Rs53 and Rs18 per litre, respectively, if the government passes on the full impact of global oil markets to consumers, effectively eliminating the subsidy in an effort to repay the IMF loan, The News reported Tuesday, citing industry officials.
According to oil sector calculations, the ex-depot price of high speed diesel (HSD) will be Rs257.14 per litre for the couple of weeks starting June 15, 2022, up from Rs204.15 per litre on June 1, 2022, a Rs52.99 increase.
The ex-depot price of petrol has been calculated at Rs227.8/litre for the next two weeks, compared to Rs209.87/litre on June 1, 2022, a Rs18.01 difference. These calculations for the next two weeks are based on an exchange rate of Rs201.89/dollar, up from Rs200.89/dollar in the previous two weeks, representing a 0.79 percent increase.
If the government maintains diesel and petrol prices at June 1 levels for the next two weeks, it will have to bear a subsidy of Rs52.99/litre on diesel and Rs18.01/litre on petrol, according to oil sector officials.
To qualify for the next tranche of $1 billion under the Extended Financing Facility (EFF), signed by the former PTI-led government with the IMF, the federal government raised diesel and petrol prices by Rs30/litre each, first in the last week of May and then in the first week of June this year, reversing the subsidy by a total of Rs60/litre for both fuels.
Despite this, the government continues to subsidise petrol at Rs9.3/litre and diesel at Rs23.05/litre. The prices of gasoline and diesel were frozen by then prime minister Imran Khan on February 28, 2022, until the next fiscal year. The current administration maintained that policy until the last week of May.
However, due to rising global oil prices and a heavy burden on the national exchequer, the policy was forced to be reviewed. The country's oil sector also urged the government to remove the fuel price cap, which was causing liquidity issues for oil companies due to PDC payment delays (price differential claims).