The government on Thursday reduced oil prices by up to 7.9% due to a sharp decline in global oil prices. However, the full impact of declining oil prices in the international market was not passed on to consumers in order to cover adjustments made in petroleum levy.
The new prices will be effective from Friday (today) till June 15 as the government, backed by refineries, has implemented a mechanism of notifying prices on a fortnightly basis. In 2008-09, the government had decided to revise oil prices on a monthly basis to rationalise prices in accordance with constantly fluctuating global oil prices.
“But the government has again reversed the decision [at a time when] oil prices have gone up most of the time,” an official said, adding that the new mechanism of price revision on a fortnightly basis will provide relief to consumers if global prices remain stable. However, the official said that the oil industry would benefit it if global oil prices rose.
According to a notification issued by the Oil and Gas Regulatory Authority (Ogra), the price of petrol has been slashed by 3.3% (Rs3.39), High Speed Diesel (HSD) by 1.1% (Rs1.23 per litre), High Octane Blending Component (HOBC) by 7.9% (Rs10.74 per litre), Light Diesel Oil (LDO) by 6% (Rs5.84 per litre) and kerosene by 5.9% (Rs5.90 per litre).
The new prices of petroleum products: petrol, Rs99.97 per litre; HSD, Rs 105.77; HOBC, Rs125.07; LDO, Rs91.59; kerosene oil, Rs94.05. Ogra had actually proposed to slash the price of HOBC by Rs13.24 per litre, petrol by Rs4.71, kerosene oil by Rs6.88, HSD by Rs5.64 and LDO by Rs5.84.
The rate of petroleum levy on petrol has been raised from Rs8.86 to Rs10 per litre, HSD from Rs4.20 to Rs8 per litre, HOBC Rs11.84 to Rs14 per litre and kerosene oil from Rs5.15 to Rs6 per litre. The new rates of petroleum levy were approved by parliament. The price of JP-1 has also dropped by Rs3.41 to Rs87.13 per litre, JP-4 by Rs7.28 per litre to Rs76.33 per litre and price of JP-8 by Rs5.22 to Rs83.36 per litre.
A senior government official said that, despite the reduction in oil prices, the government would collect a whopping amount of Rs13 billion till June 15 – Rs4.5 billion on account of petroleum levy and Rs8.5 billion General Sales Tax (GST) on petroleum products.
Published in The Express Tribune, June 1st, 2012.