Govt to reduce diesel price by over Rs30 per litre after ‘successful talks’ with refineries

Govt to reduce diesel cost by over Rs30 per litre after 'successful negotiations' with refineries.

Key points

• Petroleum rates have skyrocketed due to the ongoing US-Israel war on Iran, with diesel at present standing at almost Rs400 per litre.
• Oil refineries, responding to the government's request, have decided to provide relief of Rs30-32 per litre.
• According to the Prime Minister's Office, PM Shehbaz instructed the petroleum minister to engage with local refineries and conclude negotiations at the earliest.
• Oil jumps past $91 as Iran war keeps Hormuz oil flows in limbo against the backdrop of stalled diplomacy.
• The protest was afterwards called off after the Economic Coordination Committee approved an rise in dealers' margins on petrol and high-speed diesel.

Petroleum minister notes will consult with refineries in Karachi on their upgradation. New diesel rate projected to fall significantly today. Govt promises to pass savings onto consumers. Further public relief measures projected in coming days.

ISLAMABAD: The administration is due to provide major relief to consumers as oil refineries have agreed to reduce the rate of diesel by more than Rs30 per litre after consultations with the administration, Petroleum Minister Ali Pervaiz Malik stated on Wednesday.

"Oil refineries, responding to the government's request, have decided to provide relief of Rs30-32 per litre. In a few moments, Ogra will unveil its calculations before the public, " the minister remarked while addressing a press conference along with Information Minister Attaullah Tarar.

Notably, the presser came hours after Prime Minister Shehbaz Sharif had directed Malik to visit Karachi for discussions with local oil refineries to secure a reduction in diesel costs and provide relief to the public.

According to the Prime Minister's Office, PM Shehbaz instructed the petroleum minister to engage with local refineries and conclude negotiations at the earliest. He observed that a major portion of the diesel consumed in the country was produced by domestic refineries and called on measures to bring down its cost and transfer the benefit to consumers.

For context, a significant portion of the transport sector relies on high-speed diesel. Its cost is considered inflationary since it is predominantly employed in heavy goods transport vehicles, trucks, buses, trains, and agricultural machinery such as tractors, tube wells, and threshers.

Meanwhile, the consumption of high-speed diesel particularly contributes to the rose costs of vegetables and other food items.

During the presser, Malik remarked the new diesel rate would show a significant reduction today, adding that the administration would ensure the benefit of the lower refinery rate was passed on to consumers.

".I am thankful to the refineries, " he remarked, highlighting that they've assisted the administration during the war by reducing the rate of petroleum products.

According to The minister, he would hold consultations with the refineries in Karachi on the upgradation of refineries – which has not been done "for more than seven decades".

While briefing journalists, remarked the prime minister had chaired the gathering and directed the petroleum minister and relevant authorities to negotiate with oil refineries and ensure whatever relief was feasible was provided to the public, tarar.

He remarked providing maximum feasible relief to the individuals had remained the government's priority, adding that the public would receive "more good news" over the next few days.

Malik remarked the administration was fully cognisant of the difficulties and hardships being faced by the individuals and was making immediate efforts to provide whatever relief was feasible.

While stressing that the administration would continue taking every feasible step to protect consumers, he remarked the decision to subsidise petroleum products was additionally part of those efforts.

In practice, the petroleum minister attributed the recent growth in petroleum costs to the escalation in the intensity of the war, saying a number of countries were additionally facing difficulties in securing diesel supplies.

He remarked the administration had consulted with the refineries and the discussions had resulted in their decision to reduce the cost of diesel by more than Rs32 per litre.

Notably, the government's move follows mounting public criticism over repeated fuel cost increases and their impact on inflation. The pressure has intensified after the administration shifted from a fortnightly review of petroleum costs to a daily mechanism against the backdrop of heightened volatility in international oil costs after renewed hostilities in the Middle East.

When Israel and the United States introduced attacks on Iran, prompting Tehran to close the Strait of Hormuz, a crucial route for global energy supplies, the administration had previously moved to a weekly fuel rate review after the conflict erupted on February 28.

Notably, the fuel cost dispute has additionally fuelled pressure from transporters and petroleum dealers. Earlier this week, the All Pakistan Goods Transport Alliance suspended its nine-day nationwide strike for 40 days after the federal and Sindh governments assured it of progress on key demands, including petroleum pricing.

Meanwhile, the Pakistan Petroleum Dealers Association had additionally issued a 72-hour ultimatum to the administration earlier this month, demanding resolution of its outstanding problems and implementation of commitments produced by the petroleum minister.

In practice, the protest was afterwards called off after the Economic Coordination Committee approved an rise in dealers' margins on petrol and high-speed diesel.

Meanwhile, the Jamaat-e-Islami continued its sit-ins in provincial capitals for a fourth consecutive day, protesting high petroleum levies, rising inflation and rose electricity bills as higher fuel costs continued to squeeze household budgets.

China leads wave of clean power wastage as grids globally hit limits. Pakistan refiner Cnergyico expands US crude imports against the backdrop of Hormuz disruption. Pakistan's refinery upgrade plan moves forward with planned $5bn investment.

Oil stays near highs as tanker attacks, fading peace hopes threaten Hormuz flows. Goods transporters suspend nationwide strike for 40 days after govt assurances. Govt intends major reforms to accelerate construction industry expansion.

Oil heads for sizeable weekly gains as US-Iran discussions stall, tensions mount.

Taken together, the developments around govt to reduce diesel price by over Rs30 per litre after successful point to a situation that is still moving, and the coming days should bring more clarity.