ISLAMABAD: Present government may withdraw the subsidy on petrol entirely by raising its price by Rs 21 per litre while the same increase in the price of high-speed diesel (HSD) will partially alleviate the impact of the subsidy announced by the previous Prime Minister on February 28, an official of petroleum division told Business Recorder on condition of anonymity.
The complete withdrawal of the relief package would have raised HSD by Rs51 per litre and Rs 21 per litre on petrol. The Economic Coordination Committee (ECC) was briefed on 19 April that a sum of Rs 98 billion would be required for May, as well as, June to continue the relief package. According to an OGRA official from April 16-30, petrol cost to the government is Rs 171 per litre whereas it is being sold at around Rs 150 per litre while HSD costs the government around Rs 196 per litre but it is being sold at Rs 144 per litre.
Finance Minister Miftah Ismail has categorically stated in Washington DC that Pakistan cannot afford to give the subsidies that are being given now; they will have to be curtailed. And he accused former Prime Minister Imran Khan of setting a trap for the incoming government through his unsustainable 28 February relief package. The final decision would be taken by Prime Minister Shehbaz Sharif, Ismail added.
According to the OGRA proposal, if the government imposes a Rs 30 per litre petroleum levy and 17 percent GST to meet the revenue shortfall, the price of petrol will be Rs 235 while HSD price will go up to Rs 264 per litre. The government has been charging zero PL and GST on these two petroleum products since March 1, 2022.
The government has released Rs68.74 billion as rice differential claims (PDC) to oil marketing companies/ refineries for the month of April 2022 and to meet the shortfall for March 2022.
Energy experts said the emergency oil release, amounting to about $ 1 million barrels per day from May to the end of the year, may cap price rises in the short term, but would not fully cover volumes lost from Russia due to sanctions after its invasion of Ukraine.
Copyright Business Recorder, 2022