ISLAMABAD: The federal government has adjusted the potential increase in petrol prices by reducing the Inland Freight Equalization Margin (IFEM) by Rs2.92 per litre, effective December 16. This move is intended to protect consumers from higher fuel costs.

On Sunday, the government kept the price of petrol unchanged while reducing the prices of high-speed diesel (HSD) by Rs3.05 per litre, kerosene oil by Rs3.32 per litre, and light diesel oil (LDO) by Rs2.78 per litre.

Sources said the Oil and Gas Regulatory Authority (OGRA) recommended a petrol price increase for the second half of December.

However, the government decided to maintain the current price by reducing the IFEM from Rs7.92 to Rs5 per litre.

Additionally, the exchange rate adjustment was increased by Rs1.19 per litre, and the average Platts price with incidentals and duty was raised by Rs1.73 per litre.

The increase in petrol prices was imminent due to an increase of Rs1.19 per litre in the exchange rate adjustment and Rs1.73 per litre increase in the average Platts price, including incidentals and duty.

On HSD, Rs3.05 per litre reduction has been passed on to end consumers. Avg of Platts with incidentals and duty has reduced by Rs2.35 per litre from Rs176.76 to Rs174.41 per litre, PSO exchange rate adjustment was zero from 95 paisa allowed in last fortnight (December 1-15). IFEM was increased by three paisa from Rs4.15 per litre to Rs4.18 per litre.

The executive committee of the Special Investment Facilitation Council (SIFC) has instructed the Petroleum Division to develop a plan for initiating $5-6 billion worth of upgrade projects for domestic refineries.

To fund these upgrades, the SIFC has approved a Rs2.5 per litre increase in the IFEM for petrol, HSD, kerosene, and LDO. The additional revenue generated will be deposited into escrow accounts, which the refineries can then utilise for their modernisation projects.

Copyright Business Recorder, 2024