Prices of petroleum products may go up 6.3% in October

Petroleum ministry receives OGRA’s summary for an upward revision in oil prices

ISLAMABAD: Officials in the petroleum and natural resources ministry have revealed that petroleum product prices could be jacked up by up to 6.3 % for October 2016 due to a rise in global crude prices.

On Thursday, the ministry received a summary from the Oil and Gas Regulatory Authority (Ogra) that recommended an upward revision in oil prices. Prices of all petroleum products, except for kerosene oil, are deregulated and Ogra only monitors their prices.

The government has the capability to absorb the impact of proposed increase in oil prices by adjusting the tax rates on petroleum products.

Despite of over 50% decline in global prices, consumers have largely been denied a full relief in previous months due to hefty taxes to avoid revenue loss to the government. At present, two types of taxes are being charged from the oil consumers including petroleum levy and general sales tax.

The Ministry of Finance may oppose any proposal for keeping oil prices unchanged in the latest revision as it would affect the country’s revenues. Final decision will be taken by cabinet chaired by Prime Minister Nawaz Sharif on Friday (today).

Possible breakdown

Following the global price rise, the effect will be felt in prices of petrol, light diesel oil (LDO), kerosene oil, high octane blending component (HOBC), JP-1, JP-4 and JP-8. However, the price of High Speed Diesel (HSD) may witness a decline following reduction in its price in the international market.

According to Ogra’s summary, petroleum ministry officials said the consumers of the HSD, which is mostly used in the transport and agriculture sectors, may face a cut of Rs0.28 (0.4%) which would take the price to Rs72.24 per litre from the existing Rs72.52.

However, petrol prices may go up from the existing Rs64.27 to Rs64.37 per litre, an increase of Rs0.10 (0.2%). The price of kerosene oil, used for cooking purposes in remote areas where liquefied petroleum gas is not readily available, may rise from Rs43.25 to Rs45.96 per litre with an increase of Rs2.71 (6.3%).

Similarly, the LDO, mainly used for industrial purposes, may record an increase of Rs1.81 (4.2%), meaning the price will go up from Rs43.34 to Rs45.15 per litre. Price of the HOBC, mainly used in luxury cars, may rise by Rs3.55 (4.9%) taking the rate to Rs76.13 from Rs72.58 per litre.

Prices of JP-1 may be increased by Rs1.67 (4.1%) from Rs40.52 to Rs 42.19 per litre.

Published in The Express Tribune, September 30^th, 2016.