Subsidy on POL brought down to Rs56.71
A worker holds a nozzle to pump petrol into a vehicle at a fuel station. PHOTO: REUTERS
Owing to the government’s decision to roll back billions in fuel subsidies to placate the International Monetary Fund (IMF), prices of petroleum products shot up on Friday as subsidies – previously subsidized up to Rs86.71 per litre – were slashed to Rs56.71.
The increase in prices of petroleum products by Rs30 per litre announced by the government on Thursday night took effect on Friday.
According to sources, the subsidy on high-speed diesel (HSD) has come down from Rs86.71 per litre to Rs56.71 per litre.
The subsidy on petrol has been reduced from Rs47.2 to Rs17.2 per litre and the subsidy on light diesel has come down from Rs67.84 to Rs37.84.
Similarly, the subsidy on kerosene has been reduced to Rs21.83 per litre from Rs51.83 per litre.
However, the levy and sales tax on petroleum products will remain zero.
In case the government decided to raise the levy and sales tax, the prices may go up further.
It is pertinent to note that former prime minister Imran Khan had announced a relief package which pushed down the consumer prices of motor spirit (petrol) and high-speed diesel by Rs10 per litre and also put a freeze on prices till the end of the current fiscal year on June 30.
Following the announcement, the petroleum levy and sales tax on petrol and diesel was brought down to zero. That triggered price differential claims from the OMCs and refineries, which were being released by the government in the form of subsidies.
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With the fresh hike, the new price of petrol will be Rs179.88 per litre -- the highest ever rate -- and showing an increase of 20% over the existing prices. Ismail said that it was a “difficult decision that will erode the political capital” of the government.
“The government was giving Rs56 per litre subsidy and I have only reduced the loss by Rs30 per litre,” said Finance Minister Miftah Ismail while addressing the news conference.
Miftah said that the government was giving Rs86 per litre subsidy, and in the first batch, it has reduced the subsidy amount by only Rs30.
“The government cannot take the country towards default and is ready to pay the political cost for the sake of protecting the interest of the state,” said the finance minister.
“There is an option whether to protect the political interests of the government or save the country from default and we have decided to protect the state’s interests,” said the finance minister.