More fuel price shocks in pipeline

In simple words, he said the domestic prices of diesel and kerosene would increase around Rs 90 and Rs 80 per litre respectively by December this year because of the recovery of backlog. But the prices of diesel and kerosene oil could exceed this benchmark in case the international oil prices moved above 150 dollars a barrel in 2008, he added.

After every fortnight, the OGRA would announce gradual increase in the domestic prices of diesel and the kerosene that would include the amount of backlog and the impact of current increase in the global prices with the objective to phase out subsidy, said the official.

He said that except increasing the domestic oil prices, there was no any other way out to improve the fiscal position of the country amid record high international oil prices that have become unsustainable for the Federal Government due to the provision of subsidy.

“If we continue to provide further subsidy on oil prices this year, the economic position of the country would deteriorate beyond redemption,” he added.

He pointed out that the Federal Government’s borrowings from SBP and the fiscal imbalance have widened to the alarming level mainly because of billions of rupees subsidies being provided to the consumers in the country.

Important to note is that since March 2008 the domestic prices of fuel oil had been revised upward five times - two upward adjustments were made by the caretaker government while the coalition government, led by PPP, had completed hat-trick in increase oil prices.