ISLAMABAD: The Petroleum Division has proposed withdrawal of subsidy on consumption of High Speed Diesel (HSD) by the power sector, official sources told Business Recorder.

Sharing the details, sources said, in order to provide relief to the consumers, government decided to keep the oil prices stable till the end of 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 making payment of PDC to OMCs/Refineries through Supplementary Grant for the period of 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 as compared to other petroleum products leading to rise in import bill and burden of PDC.

The Petroleum Division, sources said, has proposed to abolish price subsidy henceforth on the sales of HSD for those sectors where alternate fuels are available, adding that power sector has various alternates to replace the utilisation 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 argues 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