According to industry officials, if the government passed on the full impact of global oil markets to consumers, cutting back the subsidy fully in a bid to repay the IMF loan, diesel and petrol prices might rise by Rs. 53/liter and Rs. 18/liter, respectively.
According to oil sector projections, the ex-depot price of high-speed diesel (HSD) will be Rs. 257.14/liter for the week beginning June 15, 2022, up from Rs. 204.15/liter on June 01, 2022, indicating a Rs. 52.99 rise.
For the next fortnight of June, the ex-depot price of fuel has been calculated at Rs. 227.8/liter, compared to Rs. 209.87/liter on June 01, 2022, a difference of Rs. 18.01.
These predictions for the next fortnight are based on an exchange rate of Rs. 201.89/dollar, up from Rs. 200.89/dollar in the previous fortnight, representing a Rs. 1.59 or 0.79 percent rise.
According to oil sector insiders, if the government kept fuel and petrol prices at June 01 levels for the following two weeks, it would have to pay a subsidy of Rs. 52.99 per liter on diesel and Rs. 18.01 per liter on petrol.
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 present federal government raised diesel and petrol prices twice by Rs. 30/liter 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 Rs. 60/liter for both fuels.
Despite this, the government continues to subsidize fuel at Rs. 9.3/liter and diesel at Rs. 23.05/liter.
The prices of gasoline and diesel were fixed by then-Prime Minister Imran Khan on February 28, 2022, for the remainder of the fiscal year. That policy was retained by the current government until the last week of May.
However, rising global oil costs and a significant load on the national exchequer led it to rethink the program. The country’s oil sector also lobbied the government to lift the fuel price cap, claiming that it was causing financial issues for oil corporations because of PDC payment delays (price differential claims).
To read our blog on “Fuel will be significantly more expensive as a result of the petroleum levy,” click here.
