ISLAMABAD, April 26: The government said on Saturday that there would be more increases in prices of petroleum products before the budget.

“Get ready for higher fuel prices in the coming days. The government may not be able to continue subsidies in view of higher international oil prices and other factors,” Finance Minister Ishaq Dar said during a meeting of the Senate Standing Committee on Finance and Revenue.

However, he said, the price of kerosene would not be increased because the prime minister opposed it.

Senator Ahmad Ali presided over the meeting.

Three upward revisions in fuel prices over the past six weeks had pushed the petrol price to Rs66.03 per litre from Rs53.70, an increase of Rs12.33. The diesel price increased to Rs47.28 per litre from Rs38 and kerosene oil to Rs49.02 from Rs35.23.

The finance minister said that things got further complicated because of caretaker government’s inability to pass on the increase in oil prices to end-users, adding that it also did not allocate a separate amount in the budget to cater for the increase.

“That is why we have been pushed into a tight corner. The situation is so grim that the government is providing subsidies as much as Rs17-18 per litre, but it can not go on,” he said.

In reply to a question, he said the total amount of subsidies would reach Rs153 billion by the end of June this year. He said that for macro-economic indicators, the increase would be passed on to consumers.

Mr Dar hinted at drastic cuts in the ADP and the PSDP in the coming budget because of the subsidies. He said that supplementary grants for ministries would also be cut to reduce pressure on the balance of payment. The former government, he said, had already spent Rs500 billion on expenditures.

Prices of crude oil in the international market jumped to a record high of $120 per barrel on Thursday last.

Rising oil prices had pushed inflation to an all-time high of over 14 per cent in March, with food inflation hovering around 20 per cent. The government has already revised upward its annual inflationary target, envisaging a hike in the consumer price index up to 10 per cent from the earlier target of 6.5 per cent for the current fiscal year. The annual food inflation has been projected at 14 per cent.

A senior official in the ministry of petroleum told Dawn that oil produced locally just cater for 20 per cent of the total requirement. He said the price of locally produced oil had also been linked with the international market because this production was controlled by multinational companies.

The Senate Standing Committee also discussed matters relating to the prevailing economic situation with particular reference to the factors behind the rising fiscal and trade deficits. State Bank Governor Dr Shamshad Akhtar briefed the committee on the draft of Corporate Rehabilitation Act (Bankruptcy Law).

The committee said that the draft must be circulated to elicit opinion of all stakeholders with a view to making it broad based and effective.

Some members of the committee were of the opinion that those who prepared the existing draft drew heavily on “Chapter 11 of the US bankruptcy law” without taking into account the fact that conditions in Pakistan are markedly different from that of the US.

They stressed the need for mediation rather than liquidation. “Our focus should be on reviving those companies and entities which may run into temporary difficulties due to certain conditions, but nevertheless they have the potential to resurrect.”