ISLAMABAD:
The government is expected to absorb the impact of an increase in oil prices of up to Rs49 per litre amid a sharp surge driven by tensions in the Gulf region.
According to calculations, the price of high-speed diesel had increased by Rs49 per litre, while diesel prices had risen by Rs29 per litre. However, the government may absorb this impact through price differential claims.
Usama Qureshi, Vice Chairman of Cynergy Group, said in a tweet, “Oil market accelerating, massive single-day increase.” Dubai crude price stood at $166.6 per barrel, up over $11.20 on Thursday. Diesel prices stood at $218.79 per barrel, registering an increase of over $25.71.
The price of gasoline was $145.87, posting an increase of over $11.67 per barrel. “The rally is intensifying, pressure building rapidly on importing countries like Pakistan,” he said.
During the last week, the federal government hiked the prices of kerosene oil and light diesel oil (LDO). However, it decided to freeze petrol and high-speed diesel prices by maintaining the petroleum levy and providing a subsidy to absorb rising costs.
According to the Ministry of Energy (Petroleum Division), the price of kerosene oil was increased by Rs39.20 per litre, setting the new rate at Rs358.01 per litre.
In a separate adjustment, the government also raised the price of light diesel oil by Rs67.51 per litre. The new price of light diesel oil has been fixed at Rs302.52 per litre, compared to the previous price of Rs235.01 per litre.
At the same time, the government decided to maintain the existing petroleum levy on petrol and diesel. The levy on petrol will remain at Rs105.37 per litre, while the levy on diesel will stay at Rs55.24 per litre.
Officials said that, in order to keep petrol and diesel prices stable for consumers, the government will provide a subsidy of Rs23 billion for a one-week period from March 14 to March 20.
Under this arrangement, the government will pay a subsidy of Rs49.63 per litre on petrol and Rs75.05 per litre on high-speed diesel.
The subsidy will be paid to oil marketing companies in the form of price differential claims to compensate them for the difference between market prices and the retail rates maintained by the government.
The Ministry of Energy said the payments will be made through the Oil and Gas Regulatory Authority (OGRA), which will handle the disbursement of the Rs23 billion. The authority will also implement a mechanism for verification and audit of invoices submitted by oil marketing companies before clearing the claims.
Meanwhile, the Finance Division has obtained cabinet approval for the establishment of a “Prime Minister’s Austerity Fund” to support such financial measures. The Economic Coordination Committee (ECC) has approved the transfer of Rs27.10 billion to the fund, from which the subsidy payments will be made.
