The government has to pay Rs41.11 and Rs53.14 per litre subsidy on petrol and diesel respectively in the next fortnight (June 01 to 15, 2022) if prices are not raised, The News learnt on Monday.
The cost of subsidy is figured to remain unsustainably huge despite a recent partial rollback as world oil markets are again picking up amid geopolitical risks. Country’s oil managers will review petroleum products prices on May 31, 2022 to determine their prices for the next fortnight.
The oil sector’s calculations project the price of petrol for the first fortnight of June at Rs220.97/litre. Its current price increased to Rs179.86/litre after a raise of Rs30/litre few days back.
“The difference between the projected petrol price and the current is clocking in at Rs41.11/litre,” the oil sector statistics suggested. The oil industry projected the diesel price at Rs227.29/litre for the first fortnight of June.
After the recent increase of Rs30, diesel is being sold at Rs174.15. “The differential for diesel arrives at Rs53.14/litre in the next fortnight,” data indicated. Before the price hike a few days back, the government was paying Rs86/litre as Price Differential Claim (PDC) for diesel and Rs47 on petrol in the second fortnight of May 2022.
Oil sector has worked out the PDC for the next fortnight, based on the exchange rate of Rs200.31/dollar, which is Rs8.46 or 4.41 percent higher compared to Rs191.84/dollar. Oil prices climbed above $120 a barrel on Monday, hitting their highest in more than two months, as traders waited to see whether a European Union meeting would reach an agreement on banning Russian oil imports.
The Brent crude futures contract for July, which will expire on Tuesday, was up 59 cents, or 0.5 percent, at $120.02 a barrel.
The August Brent contract, which is more active, rose 74 cents, or 0.6 percent, to $116.30 a barrel. US West Texas Intermediate (WTI) crude futures jumped 65 cents, or 0.6 percent, to $115.72 a barrel, extending solid gains made last week.
The EU is due to meet on Monday and Tuesday to discuss a sixth package of sanctions against Russia for its invasion of Ukraine, actions which Moscow calls a “special military operation”.
The estimated PDC on petrol increased after its price in the international market went up to $145.70/barrel from $135.01/barrel. However, the price of diesel in world markets decreased to $153.66 from $162.43/barrel.
According to a top executive of an oil firm, the government is likely to raise the price of diesel and price as the estimated PDC for the next fortnight is not financially sustainable for both the government and the oil companies.
“The government approved Rs62.27 billion a few days back for the payment of PDCs for the second fortnight of May and the total accumulative amount for the payment comes to Rs156 billion since the start of March 01, 2022 when the domestic prices of diesel and petrol were frozen under the policy of previous government,” the official said.
