Falling global rates: Up to Rs4.89 a litre slash in oil prices proposed

Ogra has moved a summary for reduction from May 1.

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) on Friday moved a summary with the federal government to reduce oil prices by up to Rs4.89 a litre from May 1 in line with the decline in global oil prices.

“However, the finance ministry may try to increase the amount of petroleum levy on petroleum products to compensate for the reduction in oil prices,” a government official said.

Ogra is likely to reduce the price of petrol by Rs1 a litre, high speed diesel (HSD) by Rs1.31 a litre, High Octane Blending Component (HOBC) by Rs4.89 a litre, kerosene by Rs2.13 a litre and Light Diesel Oil (LDO) by Rs1.64 a litre.

“We have strongly recommended the federal government to cut oil prices in line with falling global oil prices to provide relief to the consumers,” Ogra authorities said in the summary moved to the petroleum and finance ministries.

At present, the price of petrol is Rs103.36 a litre, HSD Rs107 a litre, kerosene Rs99.95 a litre, LDO Rs98.74 a litre and HOBC Rs135.81 a litre.

“If the proposed cut in oil prices takes effect, the new price of petrol will be Rs102.3 a litre, HOBC Rs130.92 a litre, kerosene Rs97.82 a litre, HSD Rs105.69 a litre, and LDO Rs97.10 a litre,” Ogra says in the summary.

Ogra and the petroleum ministry are in a row over fixing oil prices as the former wants to freeze oil prices for six months by giving subsidy to provide relief to the consumers.

“The petroleum ministry, however, wants to act in line with the demand of oil refineries that are calling for fixing oil prices on a fortnightly basis to avoid problems   arising out of fluctuations in oil prices due to the geo-political situation,” a government official said, adding that the government was also interested in revising oil prices on a fortnightly basis so that the increase in oil prices in the international market should be passed on to the consumers in two phases in a month.

“The burden of a rise in oil prices on the consumers may be high if prices are revised twice a month,” a government official said.

The petroleum ministry has already turned down the Ogra’s proposal to freeze prices of petroleum products for six months to provide relief to the consumers in the backdrop of volatility in global oil prices. Ogra had suggested to the petroleum ministry to follow the Indian model as they have frozen oil prices and are giving subsidy to the consumers.

The Ogra authorities had said that due to the geo-political situation and problems hindering efficient oil supply to meet the ever-increasing demand for oil all over the world, its prices had witnessed an increase of 21 per cent since the beginning of 2012 causing increase in domestic prices of petroleum products, especially petrol and HSD affecting the purchasing power of the working class.

Published in The Express Tribune, April 28^th, 2012.