The prices of diesel and petrol may go up by Rs53 and Rs18/litre, respectively, if the government passed on the full impact of global oil markets to consumers, rolling back the subsidy completely in a push to redeem the IMF loan, industry officials said on Monday.

Oil sector calculations project the ex-depot price of high speed diesel (HSD) at Rs257.14/litre for the fortnight starting from June 15, 2022 against Rs204.15/litre on June 01, 2022, showing an increase of Rs52.99.

The ex-depot price of petrol has been worked out at Rs227.8/litre for the next fortnight of June compared to Rs209.87/litre on June 01, 2022, a difference of Rs18.01. These calculations for the next fortnight have been based on the exchange rate of Rs201.89/dollar against the Rs200.89/dollar used for the first fortnight, showing an increase of Rs1.59 or 0.79 percent.

If the government continued to maintain the prices of diesel and petrol at June 01 level in the next fortnight, it would have to bear a subsidy of Rs52.99/litre on diesel and Rs18.01/litre on petrol, oil sector officials said.

The federal government jacked up the prices of diesel and petrol twice by Rs30/litre each, first in the last week of May and then in the first week of June this year, reversing the subsidy by a total of Rs60/litre for both fuels, to qualify for the next tranche of $1 billion under Extended Financing Facility (EFF), signed by the former PTI-led government with the IMF.

Despite that, the government is still paying a subsidy of Rs9.3/litre on petrol and Rs23.05/litre on diesel. The prices of petrol and diesel were frozen on February 28, 2022 by the then prime minister Imran Khan till the next fiscal year. The present government continued that policy till the last week of May.

However, it was forced to review the policy in view of rising global oil prices and heavy burden on the national exchequer. Country’s oil sector also pressed the government to remove the fuel price cap as it was creating liquidity problems for the oil companies because of delay in the payment of PDCs (price differential claims).