Tuesday May 17, 2022

Diesel subsidy swells to Rs86.11/litre for next fortnight

May 14, 2022

KARACHI: The government will have to pay a subsidy of Rs86.11/litre on diesel for the second fortnight of May, if it decides to continue cushioning consumers from price shocks, The News learnt on Friday.

According to industry estimates, the Price Differential Claim (PDC) of Rs86.11 on diesel for the next fifteen days is over Rs13 higher than Rs73.04, being paid to oil marketing companies (OMCs) and refineries to hold the price of the transport sector and farming fuel at the current levels.

The new estimate for the PDC on petrol has also shot up Rs17 to Rs46.59/litre for next fortnight against the existing Rs29.60/litre for the current fortnight.

The federal government is paying PDCs to OMCs and refineries, toeing the former government’s line to save the domestic consumers from the global oil market volatilities.

Sources in the oil sector told The News that prices of crude oil, diesel and petrol were on the higher side; however, Pakistan was also facing the brunt of sharply falling rupee, which had been making the import of petroleum products costlier.

The dollar-rupee parity has strongly tilted in favour of greenback as it rose to historic level of Rs192.53 on Friday.

According to industry officials, the situation is getting worse as far as cash flow of OMCs are concerned.

They added that immediate action was needed to avoid any breakdown in the supply chain as pointed out by Oil Companies Advisory Council (OCAC) in a letter to the government a few days back.

The ex-depot price of petrol has been projected at Rs196.45 for the next fortnight against Rs149.86 during May 01, 2022, which stands frozen since March 01, 2022.

The projected price of diesel for the next fortnight has been worked out at Rs230.26/litre against Rs144.15/litre of May 01, 2022 level, which is also at the current level since March 01, 2022.

It may be recalled that PDC on diesel for the first fortnight of March was just Rs2.28/litre, whereas the government was not paying any PDC on petrol. In the second fortnight of March, the PDC on diesel rose to Rs34.92/litre and on petrol it went up to Rs23.43/litre.

For the first fortnight of April, PDC on diesel and petrol was Rs41.43 and Rs24.07 respectively, whereas for the next it clocked in at Rs21.30 on petrol and Rs51.52 on diesel.

In the first fortnight of May 2022, the PDC on petrol is Rs29.60/litre and on diesel Rs73.04/litre.