Indicating that the international price of oil warranted an increase, the government on Wednesday, contrary to recent speculation, increased oil prices by up to Rs8.67 per litre – a 7.3% increase – effective March 1 (today).
The government also raised the price of Compressed Natural Gas (CNG) up to Rs1.77 per kilogramme due to a 20% increase in Gas Infrastructure Development Cess (GIDC). It will be the second time this month that the government has increased CNG prices.
However, there was no increase in the already sky-high price of High Speed Diesel (HSD) as the finance ministry has agreed to provide subsidy on High Speed Diesel (HSD) up to June 30. On the other hand, the government on Wednesday said that the provinces would be asked to share the burden of subsidy on other petroleum products if they wanted to provide relief to the consumers.
“The parliamentary panel will consult the political leadership and financial managers of all four provinces to contribute their share to the subsidy on other petroleum products, including petrol, Light Diesel Oil (LDO) and kerosene oil,” said Water and Power Minister Syed Naveed Qamar, who is also the chairman of the special committee on oil pricing.
The government and the PML-N had agreed on Tuesday to provide Rs15 billion subsidy on petroleum products over the next three months. However, at a closed-door meeting with a special four-member parliamentary panel at the parliament house, Qamar said that the federal government would not be able to bear the entire burden of subsidy on petroleum products for the next three months.
Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh had earlier stated that the committee subsidy on petroleum products would not only increase the fiscal deficit and worsen circular debt, but would also indirectly translate into higher inflation.
Price hike breakdown
According to a notification issued by the Oil and Gas Regulatory Authority (Ogra) on Wednesday, the price of CNG has been increased by Rs1.77 per kg to Rs77.12 per kg in Zone-1, which includes areas of Khyber-Pakhtunkhwa, Balochistan and the Potohar region (Rawalpindi, Islamabad and Gujarkhan) while prices were raised by Rs0.9 per kg to Rs71.05 per kg in Zone-2, which includes Sindh and Punjab (excluding the Potohar region).
The total increase in CNG price during month of February has been made Rs2.83 per kg in Zone-1 and Rs1.44 per kg in Zone-II.
The government has also increased the price of High Octane Blending Component (HOBC) by Rs8.67 per litre (7.3%), Petrol Rs2.75 per litre (2.9%), Light Diesel Oil (LDO) Rs3.08 per litre (3.4%) and kerosene oil by Rs4.38 per litre (4.8%) for the month of March due to hike in global oil prices.
Published in The Express Tribune, March 1st, 2012.