Fuel prices likely to jump 15 per cent

Petrol and diesel prices could rise by up to Rs12 per litre.

LAHORE: A 15 per cent increase in prices of petroleum products is likely to be made from March 1, for which Oil and Gas Regulatory Authority (Ogra) is formulating an initial report, sources said.

An official of the Ministry of Finance underlined that any potential price hike is going to be borne by consumers, after the government took a hit of Rs15 billion as a result of subsidies provided in December 2010 and January 2011.

Despite soaring prices of crude oil in the international market, the government had resisted any increase in petroleum product prices in its last two monthly revisions, due to political reasons.

However, with the price of Brent crude soaring above $105 per barrel – a two-and-a-half-year high – and a widening fiscal deficit, the cash-starved government may be left with no option but to increase prices.

In case the government subsidises the petroleum prices, the International Monetary Fund (IMF) is unlikely to approve release of suspended payments of the $11.3 billion loan package.

Petrol and diesel prices currently stand at Rs73.12 per litre and Rs78.49 per litre, respectively, and could increase by up to Rs12 each in the upcoming revision.

Published in The Express Tribune, February 22^nd, 2011.