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ISLAMABAD: The Oil and Gas Regulatory Authority (OGRA) has worked out a massive increase in the prices of petroleum products with effect from May 16 in a fortnightly review.

According to oil marketing companies (OMCs) estimates, the federal government will have to allocate Rs76 billion subsidy for the fortnight (May 16-31 in case it decides to keep petroleum prices unchanged; however, the OGRA will calculate the amount of subsidy).

The price differential claims (PDC) payable to OMCS are projected at Rs46.59 per litre for petrol and Rs86.11 per litre for high-speed diesel (HSD). On kerosene oil and light diesel oil, the price differential claims were Rs51.83 per litre and Rs68.83 per litre, respectively.

Pakistan has also committed to the IMF that it will withdraw the energy subsidy. However, the government has not yet increased the prices of petroleum products due to fear of a political backlash.

As the price differential claims continue to pile up, the Petroleum Division is seeking an allocation of Rs118 billion to bear the cost of freezing oil prices amid surging crude oil in the global market due to the Russia-Ukraine war.

Record high: April HSD sales grow 17pc to 919,442MTs YoY

The government has projected subsidy claims of Rs224 billion from the oil companies for the period March-June 2022.

At current taxes at zero rate the prices of products would likely go up from Rs46 to Rs86 per litre. In this case, the ex-depot price of HSD works out at about Rs230 per litre against the existing rate of Rs144.15. The ex-depot price for petrol comes at about Rs195 per litre instead of Rs149.86.

The kerosene price has been estimated at Rs176 per litre instead of Rs125.56 at present and the ex-depot price of light diesel oil (LDO) comes at Rs204 per litre against Rs118.31 at present.

The Finance Division endorsed the allocation of Rs52 billion for the first fortnight of May 2022 and said that the allocation for the next fortnight will be considered later.

In order to provide relief to the consumers, the former government announced a relief package on February 28, 2022. It slashed prices of petrol and high-speed diesel by Rs10 per litre each and said that the prices would be kept unchanged till the next fiscal year’s budget.

Copyright Business Recorder, 2022

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Arbas May 16, 2022 01:05am
Imported government disapproved
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Kashif ALI May 17, 2022 01:11am
I believe that Energy subsidies need to be taken back with immediate effect. The government needs revenues for paying back its external loans/liabilities. The announcement of the Fuel and Electricity subsidies was an extremely incorrect yet populist political measure that was completely against the interest of the State. In my opinion, Fuel subsidy should be formulated for two or three wheelers and implemented with immediate effect. Public transport may get a portion of subsidy. However, there must be no subsidy for any sort of private car owners (all engine sizes included from 660CC to 4800CC and above). All car users must pay for the full cost of taxes on use of fuels for their cars. Further, no subsidy should be allowed on commercial transport of goods etc. For commercial use, use of Railways should be encouraged as they are able to get optimum value of fuel consumption in terms of Freight-Tonne-miles/gallon of fuel.
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