ISLAMABAD, June 28: The government is considering a substantial increase in petroleum prices, particularly of diesel and kerosene oil, to pass on to consumers a part of the impact of rising international oil prices.

A senior government official told Dawn that under the government’s pricing formula, the prices of diesel and kerosene oil were already Rs12 and Rs11 per litre less than what should have been according to actual world prices.

The next price revision is due on June 30. A final decision will be taken by Prime Minister Shaukat Aziz.

The international crude oil prices have touched $61 per barrel while those in the Arabian Gulf have reached $53 per barrel. Pakistan imports crude and petroleum products from the Arab region.

The government had already lost Rs58 billion in petroleum development levy since May 2004, which was over 25 per cent of the country’s development budget, he said.

“We may not pass on the full impact of international oil prices to the consumers, but the government will have to come out of political compulsions, face the reality and increase the prices to a reasonable level,” the official said.

He said increase in diesel and kerosene oil by Rs12 and Rs11 per litre, respectively, would not be advisable, but at least Rs5-7 per litre increase could no more be delayed on any prudent economic principle.

Making a case for such an increase, the official said the price of diesel had increased by 79 per cent in the international market since May 2004, but Pakistan increased its price by only 19 per cent.

The kerosene oil prices, he said, had increased by 69 per cent in the international market, but Pakistan allowed only 17 per cent increase for it.

Giving another comparison, he said the petrol and diesel prices in Pakistan stood at Rs45.53 and Rs29.26 per litre, respectively, that translated into 76 cents and 49 cents, respectively.

On the other hand, prices of petrol and diesel stood at 92 cents and 65 cents per litre, respectively, in New Delhi. The petrol and diesel prices in Calcutta stood at one dollar and 70 cents per litre.

Similarly, the prices of petrol and diesel in Chennai amounted to $1.1 and 72 cents per litre, respectively, and $1.5 and 80 cents per litre in Mumbai.

He said the government had realized that if it continued to absorb higher international oil prices, it would have to generate resources through other means or cut down the development budget, which had other negative implications.