For the first time in the history of Pakistan, the price of diesel is set to rise above Rs. 200 per liter due to the rapidly increasing prices of crude oil in the global market along with the sharp depreciation of the rupee against the US dollar.
As per the officials, the newly formed government would be required to either jack up the price of diesel by Rs. 60.54 per liter or enhance subsidy to maintain the existing price by April 16.
This would lead the government into a dangerous situation and it might choose not to increase prices in a bid to win over public support, the sources said.
However, if the current government decides to continue the policy, then it will be forced to give another Rs30 billion in subsidies from April 16 to 30. Overall, it will have to bear a burden of Rs60 billion for keeping oil prices unchanged.
If the authorities choose to raise the price, the per-liter diesel cost will jump to Rs. 204.69.
OGRA’s advice:
Oil and Gas Regulatory Authority (OGRA) advised the newly formed government to scrap the subsidies and raise prices effective Saturday, according to sources in the regulator, according to the Reuters.
Two scenarios have been put forward by OGRA to choose from;
- Either the government continued to keep levies and tax at zero
- Or they would be re-imposed to increase revenues
According to the sources of the international news agency, diesel fuel prices should be hiked by over 35% from 144 rupees ($0.8) to 195 rupees ($1.1) per liter. This would increase to 264 rupees ($1.5) per liter if levies and tax were re-introduced – an 83.2% rise in price.
Moreover, petrol should be raised by 14% to 171 rupees per liter from its current price of 150 rupees ($0.83). The price, if levies and tax are included, would shoot up 57% to 235 rupees ($1.3) per liter.