Govt likely to hike petroleum prices: sources

Prior to Pakistan’s talks with the International Monetary Fund (IMF) to relaunch the $6 billion lending package, the government is considering gradually removing the subsidy on petroleum products.

Sources indicate the government has received a summary from the Oil and Gas Regulatory Authority (OGRA) for the increase in petroleum prices from May 16.

Likely, the government will gradually abolish subsidies on all petroleum products, sources familiar with the matter said that the decision on fuel prices for the next fortnight is expected on Sunday (today).

Federal Defense Minister Khawaja Asif, who was in London with Prime Minister Shehbaz Sharif holding talks with the supremo Party Nawaz Sharif to finalize the strategy, said “big decisions” will be made in the next 48 hours to cope with the ongoing financial crisis.

Currently, the government provides a subsidy of 29.60 Rs. 29 per litre for petrol, according to sources, adding that the fuel subsidy will cost the national exchequer Rs45.14 as of May 16 if petroleum prices are not increased.

The price of petrol will rise to Rs. 190 a liter if the government removes all subsidies on it, said the sources.

Similarly, the government subsidizes diesel at Rs73.04 per litre and kerosene at Rs43.16 per litre. Diesel and kerosene prices will go up to Rs. 230 and Rs. 176 per litre if the subsidy is eliminated.

However, without an increase in diesel and kerosene prices, the government must subsidize products by Rs. 85.85 and 50.44 per litre, respectively, starting on 16 May.

Furthermore, the government is currently granting a subsidy of Rs. 64.70 per litre for light diesel and it will increase to Rs. 68 as of Monday if prices are maintained.

Likewise, Light diesel will be sold for Rs. 186.31 per liter if the government removes all subsidy on it, the sources added.

OGRA informed the federal government of the increasing subsidy on oil products, according to sources.

The Ministry of Finance will make the final decision on oil prices after consulting the Prime Minister.