ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet is all set to consider a proposal of the Petroleum Division regarding withdrawal of subsidy on consumption of High-Speed Diesel (HSD) by the power sector, sources told Business Recorder.
The Petroleum Division argues that in order to provide relief to the consumers, the government has decided to keep oil prices stable till the end of the current fiscal year, effective from March 1, 2022.
However, due to this capping, Price Differential Claims (PDC) of Oil Marketing Companies/ Refineries had been generated. Accordingly, Rs 218.22 billion had so far been allocated for payment of PDC to OMCs/Refineries through Supplementary Grant for the period March 1 to May 31, 2022.
According to sources, HSD (diesel) prices in the international energy market are at an unprecedented high level. Resultantly, the cost of HSD has also increased compared to other petroleum products leading to a rise in the import bill and a heavier burden of PDC.
The Petroleum Division, sources said, has proposed to abolish price subsidy henceforth on sales of HSD for those sectors where alternate fuels are available, adding that power sector has various alternates to replace the utilization of HSD through other fuels. Resultantly, the fortnightly import of HSD will be reduced by 10,000 million tons and PDC burden on GoP treasury may be reduced by Rs 712 million i.e. equivalent to $ 3.5 million.
The Petroleum Division maintains that under this scenario, separate prices of HSD for power sector companies will be worked out and monitored by Ogra simultaneously on fortnightly basis.
Copyright Business Recorder, 2022