More fuel price shocks in pipeline

KARACHI - The consumers are set to bear more major oil shocks this year as the Federal Government appears in a mood to incorporate further substantial increase of Rs 40 per litre in the price of diesel and Rs 30 in kerosene oil price in phases by December 2008.

Meanwhile, the domestic prices of petrol are also expected to be adjusted upward further to end the gap of Rs 5 per litre in the international and domestic prices.

This increase in domestic oil prices is aimed at recovering the backlog of difference in international and domestic oil prices, a senior Federal Government official privy to this upcoming development told TheNation on Wednesday.

He pointed out that the domestic oil prices would be adjusted on fortnightly basis by the OGRA.

At present the Federal Government is bearing a subsidy of Rs 40/litre on diesel, Rs 30 on kerosene and Rs 5 on petrol, said the official, adding that by December 2008 the government would phase out the subsidy and pass on to the consumers the huge backlog and difference of current prices of oil in the international prices.

Explaining the price adjustment mechanism, the official said that if the oil prices further increased in the international markets this year that would also be passed on to the consumers along with the recovery of the backlog amount.