Petroleum Ministry proposes increase in oil prices
Staff Report
ISLAMABAD: Petroleum ministry has proposed an increase of Rs 8.6 per litre in petrol price and a hike of Rs 5.5 per litre in diesel price that is likely to be effective from December 1.
Sources told this scribe that proposals given by the petroleum ministry would be considered by the Economic Coordination Committee (ECC) of the Cabinet that may meet on Wednesday (tomorrow) with caretaker Prime Minister Muhammadmian Soomro in chair.
Sources told Daily Times that with the rise in oil prices, the new prices of diesel and petroleum would stand at Rs 42.5 per litre and Rs 66.2 per litre, respectively.
Sources further said that government is mulling an increase in oil prices as the government was bearing a huge amount of subsidy (almost Rs 13 billion per month) on the rise in international oil prices. Sources further said that the ministry had earlier proposed an increase of Rs 11.5 per litre in petrol and Rs 7.4 per litre in diesel prices, respectively.
According to its forecast, the government had projected an impact of Rs 25 billion in 2007-08 but oil prices in the international market have increased manifold, defying government’s expectations. Sources said that government had given over Rs 37 billion in subsidies so far and could not bear the burden of such a huge amount and therefore it was a strong possibility that government would increase oil prices from the next month.
Sources further said that the Oil and Gas Regulatory Authority (OGRA) has also asked the federal government to end the subsidy to cap the petroleum prices. The oil marketing companies were also pressing to end the support given in the form of subsidy.
An official in OGRA told this scribe that the World Bank is also pressing to end the subsidy on the petroleum prices to let the market forces operate freely. OGRA has also recommended to the caretaker government to end the subsidy and pass on the burden to the consumers. During the Shaukat Aziz government, government had capped the prices for many months fearing a strong reaction from masses and opposition but now the caretaker government is all out set to increase the prices of the petroleum products.