Govt may absorb up to Rs49/litre fuel hike

The Government of Pakistan is reportedly evaluating measures to absorb a substantial increase of up to Rs49 per litre in domestic fuel prices following a sharp escalation in international oil markets driven by geopolitical tensions in the Gulf region, as highlighted by The Express Tribune.

According to official assessments and industry estimates, global price movements have resulted in an approximate increase of Rs49 per litre in high-speed diesel and Rs29 per litre in petrol. Notwithstanding these developments, the government is considering mitigating the domestic impact through the mechanism of price differential claims, thereby maintaining existing retail prices.

To offset the immediate impact of rising international costs, an allocation of Rs23 billion has been earmarked for the period from March 14 to March 20. Under this arrangement, subsidies amounting to Rs49.63 per litre on petrol and Rs75.05 per litre on high-speed diesel are proposed.

These subsidies will be disbursed to oil marketing companies in the form of price differential claims to bridge the gap between international procurement costs and regulated domestic prices.

The Ministry of Energy has indicated that the Oil and Gas Regulatory Authority will oversee the disbursement of the allocated Rs23 billion, alongside implementing verification and audit procedures for invoices submitted by oil marketing companies prior to claim settlement.

Industry representatives, including Usama Qureshi of Cynergy Group, have noted a sharp acceleration in global oil prices. Dubai crude has reportedly reached $166.6 per barrel, reflecting an increase of over $11.20 within a single trading day. Similarly, diesel prices have risen to $218.79 per barrel, marking an increase exceeding $25.71, while gasoline prices have climbed to $145.87 per barrel, up by more than $11.67. These developments are exerting significant pressure on oil-importing economies, including Pakistan.

In the preceding pricing cycle, the federal government adjusted prices of kerosene oil and light diesel oil (LDO), while maintaining petrol and high-speed diesel rates through continued subsidy support and retention of the petroleum levy.

As per the Ministry of Energy (Petroleum Division), the price of kerosene oil was increased by Rs39.20 per litre to Rs358.01 per litre, whereas light diesel oil prices were raised by Rs67.51 per litre to Rs302.52 per litre, compared to the earlier rate of Rs235.01.

Simultaneously, the government maintained the petroleum levy at Rs105.37 per litre on petrol and Rs55.24 per litre on high-speed diesel, ensuring continued fiscal inflows despite subsidy interventions.