Petrol price likely to increase for the rest of December

ISLAMABAD: Petrol price in Pakistan is likely to go up for the rest of December, as the government prepares for its regular price review.

Starting December 16, petrol could see a small hike of Rs0.81 per litre, while diesel might get a slight relief, with a reduction of Rs3.94 per litre. These changes are expected to stay in place until the start of next year.

We’ll get the official word on these adjustments on December 15, after 9:00 PM.

Government sources say the minor petrol price increase and diesel drop are linked to global market fluctuations, with the ongoing conflict in Syria playing a key role.

If things settle down in Syria soon, there’s a chance that fuel prices could dip further. Although there’s plenty of crude oil available internationally, demand is still on the lower side.

By December 16, petrol is expected to climb to Rs252.92 per litre, while diesel could drop to Rs254.53, down from Rs258.43. Right now, in cities like Islamabad, Lahore, and Rawalpindi, petrol is selling at Rs253.00 per litre, while hi-octane petrol is going for Rs261.90.

Government eyes $5-6 billion refinery upgrades

Meanwhile, the government is pushing ahead with plans for a major upgrade of local refineries, worth $5-6 billion.

Officials have asked the Petroleum Division to come up with a proposal in a week to get the projects rolling. This came out of a recent meeting of the Special Investment Facilitation Council (SIFC), chaired by Planning Minister Ahsan Iqbal.

To fund these upgrades, authorities have temporarily decided to bump up the inland freight equalisation margin (IFEM) by Rs2.5 per litre on petrol, diesel, kerosene, and light diesel oil. The extra money will go into special ESCROW accounts to be used by the refineries under a government-backed incentive plan.

But this setup will only last until the next budget.

Ogra, the oil regulator, has been asked to figure out the impact of this increase, and a detailed report will be presented to the Economic Coordination Committee (ECC) for approval.

Not everyone is on board, though. Parco, which controls 48 per cent of the market, isn’t thrilled about the temporary nature of this hike.

They’re pushing for a long-term fix to the sales tax issues. The sales tax exemption on petroleum products in the 2024-25 budget has already made it tough for refineries to sign agreements with Ogra, which are crucial for these upgrade projects to kick off.

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