Petroleum prices are likely to go up by Rs 86 per liter. Subsidies could cost Rs 75 billion

If the government decides to subsidize payments to oil companies as a price differential claim under IMF conditions, prices of petroleum pro...

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If the government decides to subsidize payments to oil companies as a price differential claim under IMF conditions, prices of petroleum products are likely to increase by up to Rs 86 per liter for the next 15 days. While in case of providing subsidy, a burden of Rs 75 billion could be imposed on the national exchequer.

 

According to the Dawn newspaper, Esther Perez Ruiz, a representative of the IMF based in Islamabad, said that the IMF team would start a staff mission with Pakistani officials in Doha from May 18.

The economic team, led by the IMF and Muftah Ismail, revived the IMF fund program in the last week of April, expanding  2 billion and completely reversing other measures, including fuel and energy subsidies, in the next budget. Also agreed to a one-year extension.

The government is currently providing subsidy of Rs 31 per liter on petrol and Rs 73 per liter on diesel besides Rs 5 per unit on electricity.

 

Read also: Prices of petroleum products likely to increase by Rs

Sources said that according to OGRA calculations, if the cost of imports is passed on to consumers, then petrol would increase by Rs 47 per liter and high speed diesel (HSD) by about Rs 86 per liter.

Similarly, the price of kerosene and light speed diesel has been increased by Rs 52 and Rs 69 per liter respectively, excluding taxes.

For this process, the oil companies will have to pay an additional amount of about Rs. 75 billion from the national exchequer as PDC for the last fortnight of this month.

OGRA sources said that according to the current rate of tax rate, which is currently zero, the prices of all petroleum products should be increased by 46 to 86 per cent per liter so that consumers would be able to break even without any element of subsidy. I can neither gain nor lose).

Read also: Summary of increase in prices of petroleum products rejected

In this case, the ex-depot price of HSD is Rs. 230 per liter while its current price is Rs. 144.15 paise, which needs to be increased by Rs.

The ex-depot price of petrol is around Rs 195 instead of Rs 149.86, which is about Rs 47 or 31 per cent higher.

Under the same formula, the ex-depot price of kerosene is about Rs 176 per liter while it is being sold at Rs 125.56 per liter with a difference of about Rs 12.41 per liter.

The Light Speed ​​Diesel has a depot price of Rs 204 while for consumers it is Rs 118.31, which requires a 57% increase of Rs 68.

Read more: Government raises petrol price again

The second but unusual scenario is to fully consider the tax rate, which includes 17% GST and HSD on all products and a petroleum levy of Rs 30 per liter on petrol, followed by Rs 12 on kerosene. Per allowable rates under the Finance Bill including Petroleum Levy of Rs. 10 per liter and LDO will be included.

Sources said the price adjustment would be a purely political decision and could include halving the subsidy in advance.

The total impact of PDC payable to oil marketing companies on these rates is estimated at about Rs 96 billion for May, up from Rs 69 billion in March and Rs 62 billion in the first 24 days of April.