ISLAMABAD, Nov 24: Oil prices would be increased shortly as the government could no more absorb a loss of Rs13 billion per month on account of the phenomenal rise in international oil prices.

“We have started facing negative impact on our budgetary projections, therefore, it has become inevitable to raise petroleum prices either from December or January,” caretaker Finance Minister Dr Salman Shah told Dawn on Saturday.

The government, he said, had projected an impact of Rs25 billion in 2007-08, keeping in view rising oil prices in the international market. But since this impact had increased manifold, the government was forced to announce certain hike in the oil prices soon, he added.

He said the government was anticipating that international oil prices would stabilise during the first six months of the current financial year. “But it did not happen and now we cannot adjust our budget without increasing the prices of petroleum products and the nation has to live with it,” the minister said.

The increase in oil prices, he agreed, could further push food inflation up in the country. “But our effort would be to save the common man from unreasonable price hike,” he assured.

Asked whether the government planned to announce 15-20 per cent increase in oil prices, Dr Shah said the officials concerned were working out the details and would very soon be finalising the issue. “We have to adjust our budget otherwise we will be facing serious financial problems,” he said. The previous government had avoided to burden the masses with another oil price hike, “But perhaps at this moment we have no option but to go for new oil prices,” he added.

Former prime minister Shaukat Aziz wanted to pass on the growing impact of international oil prices to the people but was reportedly stopped from doing so by PML president Chaudhry Shujaat Hussain keeping in view the coming elections.

The ministry of petroleum and natural resources is believed to have proposed Rs7 per litre raise in the prices of petrol and Rs6 each in diesel and kerosene from Dec 1.

The finance minister did not comment on petroleum ministry’s proposal and said: “This is a very sensitive issue and being evaluated thoroughly.”

“We have to maintain 4 per cent of fiscal deficit in 2007-08 and this calls for revising oil prices upward and the caretaker government plans to do that without further wasting any time,” Dr Shah said.

“We are not in a position to continue paying Rs13 billion per month as price differential claims to oil marketing companies keeping in view our current budgetary position,” the minister said.