ISLAMABAD: Pakistan’s Petroleum Minister Ali Pervaiz Malik said on Monday that the country’s oil refineries have agreed to absorb Rs15 billion [$54 million] this month in costs to allow the government to sell petrol at Rs15 per liter lower than what it would cost at the international market.

The development takes place after the petroleum ministry directed refiners on Friday to surrender price differentials under a formula based on March 7 benchmarks, imposing an additional financial burden of up to Rs49 ($0.18) per liter on locally produced petrol, according to industry estimates.

Speaking to reporters at a press conference in Islamabad with Information Minister Attaullah Tarar, Malik said the ongoing conflict between the United States (US) and Iran had increased costs associated with importing petroleum products, including shipping, transport, insurance and other expenses. He said the premium on petrol, which stood at around $5 per barrel before the US-Iran war, had surged to $20 per barrel.

The minister said that subsequent tenders of petroleum products by the Pakistan State Oil showed that premiums were increasing further to around $25-$30 per barrel, which would have meant higher petrol prices for the consumer. Malik said the government requested the oil refineries to take into consideration inflation and the problems that the masses were suffering from an increase in fuel prices.

“I am thankful that they [oil refineries] listened to us and they helped the government in the Rs15 per liter price of petrol change that was about to happen,” Malik said. “Because of that we were able to maintain the same prices.”

Malik said the refineries had agreed to absorb a financial burden of Rs15 billion [$54 million] monthly due to which the government will be able to sell petrol at a rate that would be Rs15 per liter cheaper than what it would be in the international market.

Malik said the government had to ensure the price of petrol had to be maintained without disrupting the availability of imported petrol in the country. He noted that around 70 percent of Pakistan’s petrol is imported from the global market and only 30 percent is obtained locally.

Highly placed government sources told Arab News this was a “one-off” step by the refiners.

“This is one-off, they have absorbed Rs15 billion which would cost them per month,” he said. “It depends on future how much they will absorb. This is only for this month.”

Usama Qureshi, vice chairman of Pakistan’s largest refiner Cnergico Pk Ltd, said the government had not consulted refineries.

“Refineries haven’t agreed with the ministry nor were they consulted,” he said.

Tarar spoke at the press conference about the Prime Minister’s Fuel Relief Scheme, saying that over 15 million people have registered under the initiative.

Pakistan’s prime minister announced the scheme in September, through which eligible owners of motorcycles, rickshaws and small cars — particularly those who depend on transport for income — are receiving petrol at subsidized rates.

To benefit from the scheme, citizens have to register on a digital platform. Once applicants’ details are verified, they receive a digital token with personal and vehicle details.

Tarar said that relief worth Rs27 billion [$97.6 million] so far been provided to the masses under the scheme.