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HomeEconomyGovt to give around Rs30bn subsidy on POL products

Govt to give around Rs30bn subsidy on POL products

March 17, 2022: The Senate's Standing Committee on Petroleum was informed on Thursday that the government would give around Rs30 billion subsidies on petroleum products in the coming fortnights to protect the common man from impacts of the increased fuel prices in the international market.

“Expected PDC (Price Differential Claim) for March 1-15 is Rs883 million, however, in subsequent fortnights, it is expected to be around Rs30 billion, depending upon international oil prices,” officials of Petroleum Division briefed the committee meeting, chaired by Muhammad Abdul Qadir.

They said prompt payment of PDCs to Oil Marketing Companies (OMCs) was needed to keep their confidence intact and avert any shortages in the market, adding “Energy supply chain might face some issues if the confidence is lacking.”

The committee was apprised that the prime minister had announced a relief package reducing the consumer price of Motor Spirit (MS – Petrol) and High-Speed Diesel (HSD) by Rs10 per litre each on February 28, and the PDCs would be adjusted accordingly.

Chairman Abdul Qadir feared that there could be a diesel shortage in the market as some OMCs had curtailed the supply to their designated fuel stations, asking the quarters concerned to take practical measures to ensure smooth supply of petroleum products across the country.

The officials said the fuel importing OMCs could need assistance with extended LC (Letter of Credit) limits on account of increasing prices in the international market. “OMCs/Refineries may need higher working capital limits on account of the price differential.”

The officials viewed that the supply of petroleum products in the international market was getting limited due to several reasons including the Russia-Ukraine conflict, adding the demand for HSD was going to increase with the start of harvesting season in the country.

Currently, they said the country had 26-day diesel stock to meet the energy needs of the consumers.

The meeting was informed that the Economic Coordination Committee (ECC) had approved a budget of Rs20 billion with a quick mechanism to pay PDC to OMCs and refineries through the Oil and Gas Regulatory Authority (OGRA) and Pakistan State Oil (PSO) within seven days after each fortnight.

The PSO has issued an urgent tender for diesel along with a normal tender and awarded two additional cargoes from the spot market for smooth supply of fuel across the country. “These are in addition to three planned cargoes through its long-term G2G supplier – Kuwait Petroleum Corporation (KPC), thus making a total of five cargoes or 275,000 MT in March 2022.”

The OGRA authorities told the body that OMCs were required to ensure dispensing petroleum products at retail outlets/petroleum pumps under the prescribed specifications, for which respective OMCs carried out on-spot quality checks through their mobile teams.

To cross-check the same, they said, random inspections were carried out through the Hydrocarbon Development Institute of Pakistan, adding the institute had recently prepared a Mobile Quality Van that would also be employed for on-spot quality testing.

APP

Posted on: 2022-03-17T14:43:10+05:00

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